Optimal Exploration and Consumption of a Natural Resource Deterministic Case
N. A. Derzko
University of Toronto
University of Texas at Dallas - Naveen Jindal School of Management
Optimal Control Applications & Methods, Vol. 2, pp. 1-21, 1981
An exploration and consumption model for exhaustible natural resources is used to formulate a deterministic optimal control problem over an infinite time horizon. A dynamic programming approach is employed throughout. The non-linear partial differential equation which results from an application of the necessary conditions is solved analytically by the method of characteristics. Several properties of the solution are discussed.
Keywords: Optimal exploration and consumption, exhaustible natural resources, economic models, dynamic programming
JEL Classification: Q3, C61Accepted Paper Series
Date posted: June 22, 2009
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