Abstract
We study an optimal control problem with a man-made capital stock, and a stock of renewable natural resource. They are substitutable inputs in the production of the final good. Starting from low levels of both stocks, the optimal policy consists of three phases. In phase I, the planner builds up the stock of resource above its steady state level, while the man-made capital stock is kept below its steady state level. In phase II, the resource stock declines steadily, while the man-made capital stock continues to grow, until the steady state is reached, and the economy stays thereafter. The model exhibits “overshooting” property.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
