Optimal Control of Pollutants with Delayed Stock Accumulation

Winkler, Ralph

doi:10.2139/ssrn.1184702

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Optimal Control of Pollutants with Delayed Stock Accumulation

CER-ETH - Center of Economic Research at ETH Zurich, Working Paper No. 08/91

25 Pages Posted: 29 Jul 2008

See all articles by Ralph Winkler

Ralph Winkler

University of Bern - Department of Economics; University of Bern - Oeschger Centre for Climate Change Research

Date Written: July 1, 2008

Abstract

We study the optimal control of a pollutant that accumulates with a delay. We find that optimal paths are, in general, non-monotonic and oscillatory, but monotonic if the objective function is additively separable. Hence, using additively separable objective functions as an approximation to a general objective function may be a misspecification. With a numerical example we illustrate that an additively separable approximation performs considerably worse in delayed compared to instantaneous stock accumulation.

Keywords: additively separable objective, approximated objective, delayed optimal control, optimal pollution control

JEL Classification: Q50, C61

Suggested Citation: Suggested Citation

Winkler, Ralph, Optimal Control of Pollutants with Delayed Stock Accumulation (July 1, 2008). CER-ETH - Center of Economic Research at ETH Zurich, Working Paper No. 08/91, Available at SSRN: https://ssrn.com/abstract=1184702 or http://dx.doi.org/10.2139/ssrn.1184702