Capital accumulation and embodied technological progress

D. Grass, R.F. Hartl, P.M. Kort

Research output: Contribution to journalArticleScientificpeer-review

Abstract

This paper combines technology adoption with capital accumulation taking into account technological progress. We model this as a multi-stage optimal control problem and solve it using the corresponding maximum principle. The model with linear revenue can be solved analytically, while the model with market power is solved numerically. We obtain that investment jumps upwards right at the moment that a new technology is adopted. We find that, if the firm has market power, the firm cuts down on investment before a new technology is adopted. Furthermore, we find that larger firms adopt a new technology later.
Original languageEnglish
Pages (from-to)588-614
JournalJournal of Optimization Theory and Applications
Volume154
Issue number2
DOIs
Publication statusPublished - Aug 2012

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Capital Accumulation
Technology Adoption
Maximum Principle
Maximum principle
Optimal Control Problem
Jump
Model
Moment
Business
Technological progress
Capital accumulation
Market
Market power

Keywords

  • optimal control
  • multi-stage maximum principle
  • capital accumulation
  • technology adoption

Cite this

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Capital accumulation and embodied technological progress. / Grass, D.; Hartl, R.F.; Kort, P.M.

In: Journal of Optimization Theory and Applications, Vol. 154, No. 2, 08.2012, p. 588-614.

Research output: Contribution to journalArticleScientificpeer-review

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