Dynamic timing decisions under uncertainty. Essays on invention, innovation and exploration in resource economics
The book focuses on problems of invention, innovation and exploration in an economy of nonrenewable (exhaustible) resources. More specifically, the authors consider (from the mathematical point of view) the problem of ``how to mitigate resource scarcity by engaging in an exploration program to discover new reserves or by starting an R\&D program to find a perfect substitute for the exhaustible resources in question''. Chapter 1 (``Resource economics modelling and the technique of optimal control'') presents basic results of optimal control and some examples in exhaustible resource economics. In chapters 2 and 3 (``R\&D timing, innovation and resource depletion under certainty'' or ``under uncertainty'') suppose that the economy being studied can embark on an R\&D program to find an inexhaustible perfect substitute (so called backstop) for the resource in question. A rather surprising result is established: when the cost of R\&D is high, society prefers the risky distribution of the random time of technological breakthrough to its certainty equivalence. Chapter 4 (``Theoretical resource exploration over space and time'') deals with the issue of resource exploration. Chapter 5 (``R\&D timing and innovation: a bilateral resource monopoly dynamic game'') introduces some strategic game interactions where one player (exporting country) is the owner of the exhaustible resource while the second player (importing country) is resource-poor but can embark on an R\&D program.
dynamic timing decision under uncertainty
scientific article; zbMATH DE number 557209