This paper considers the effect of investment in solar panels on optimal dynamic firm behavior. To do so, an optimal control model is analyzed that has as state variables goodwill and green capital stock. Following current practice in companies like Tesla and Google, we take into account that the use of green energy has positive goodwill effects. As a solution, we find an optimal trajectory that overshoots before reaching a stable steady state.
|Title of host publication||Control Systems and Mathematical Methods in Economics|
|Subtitle of host publication||Essays in Honor of Vladimir M. Veliov|
|Editors||G. Feichtinger, R.M. Kovacevic, G. Tragler|
|Place of Publication||Cham|
|Publication status||Published - 2018|
|Name||Lecture Notes in Economics and Mathematical Systems|
Dawid, H., Hartl, R. F., & Kort, P. (2018). Dynamic models of the firm with green energy and goodwill. In G. Feichtinger, R. M. Kovacevic, & G. Tragler (Eds.), Control Systems and Mathematical Methods in Economics: Essays in Honor of Vladimir M. Veliov (Vol. 687, pp. 279-296). (Lecture Notes in Economics and Mathematical Systems ; Vol. 687). Cham: Springer.