English, Article, Journal or magazine article edition: Technology adoption under embodiment : A two-stage optimal control approach Raouf, BOUCEKKINE; Cagri, SAGLAM; Thomas, VALLEE

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Bookmark: http://trove.nla.gov.au/version/178467
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Technology adoption under embodiment : A two-stage optimal control approach
Author
  • Raouf, BOUCEKKINE
  • Cagri, SAGLAM
  • Thomas, VALLEE
Physical Description
  • preprint
Notes
  • We use two stage optimal control techniques to solve some adoption problems under embodied technical change. We first solve a benchmark problem without learning behavior. At the date of switching, the consumption level is shown to drop, as the relative price of capital goes down (obsolescence). In such a case, the economy sticks to the initial technology, or immediately switches to a new technology with a higher level of embodiment, depending on how the obsolescence costs compare to the induced growth advantage. In a second step, we introduce learning. The learning curve involves fixed costs and incentives to wait as well. Adoption is shown to depend on the growth advantage of switching net of obsolescence and learning fixed costs. The economy will switch if and only if this indicator is positive. If it is big enough to ÒcompensateÓ the option of waiting, then the economy switches immediately. Otherwise, the economy waits
  • Optimal control, adoption, learning, embodiment
  • RePEc:ctl:louvir:2003007
Language
  • English
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