1,721,080 research outputs found
Qualitative methods in continuous and discrete dynamical systems
No full textThis chapter gives a general and friendly overview to the qualitative theory of continuous and discrete dynamical systems, as well as some applications to simple dynamic economic models, and is concluded by a section on basic principles and results of optimal control in continuous time, with some simple applications. The chapter aims to introduce some general concepts, notations and a minimal vocabulary concerning the study of the mathematical theory of dynamical systems that are used in the other chapters of the book. In particular, concepts like stability, bifurcations (local and global), basins of attraction, chaotic dynamics, noninvertible maps and critical sets are defined, and their applications are presented in the following sections both in continuous time and discrete time, as well as a brief introduction to optimal control together with some connections to the qualitative theory of dynamical systems and applications in economics
Dynamic modeling in renewable resource exploitation
No full textThis chapter reviews some fundamental models related to the exploitation of a renewable resource, an important topic when dealing with regional economics. The chapter starts by considering the growth models of an unexploited population and then introduces commercial harvesting. Still maintaining a dynamic perspective, an analysis of equilibrium situations is proposed for a natural resource under various market structures (monopoly, oligopoly and open access). The essential dynamic properties of these models are explained, as well as their main economic insights. Moreover, some key assumptions and tools of intertemporal optimal harvesting are recalled, thus providing an interesting application of the theory of optimal growth
Exploitation of renewable resources with differentiated technologies: An evolutionary analysis
Full text linkIn this paper, we propose a dynamical model of technology adoption for the exploitation of a renewable natural resource. Each technology has a different efficiency and environmental impact. The process of technology adoption over time is modeled through an evolutionary game employed by profit maximizing exploiters. The loss in profits due to lower efficiency levels of environmentally-friendly technologies can be counterbalanced by the higher consumers' propensity to pay for greener goods. The dynamics of the resource take place in continuous time, whereas the technology choice can be revised either in continuous-time or in discrete-time. In the latter case, the model assumes the form of a hybrid system, whose dynamics is mainly explored numerically. We shows that: (1) overexploitation of the resource arises whenever the reduction in harvesting due to a lower efficiency of clean technology is more than compensated by a higher propensity to pay for greener goods; (2) the difference between the fixed costs of these technologies can be exogenously fixed to provide an incentive for adopting clean technology without affecting the long-run level of the resource; and (3) in some cases, discrete switching of the technology causes overshooting in the dynamics whereas in others it enhances the stability of the system
An extension of the Antoci-Dei-Galeotti evolutionary model for environment protection through financial instruments
No full textThis work moves from a recent paper by Antoci et al. (2009) where a dynamic model is proposed to describe an innovative method for improving environmental quality based on the exchange of financial activities, promoted by a Public Administration, between firms and tourists in a given region. We extend their analysis in two directions: we first perform a global analysis of the basins of attraction to check the stability extents of the coexisting stable attractors of the model, and we show that some undesirable and sub-optimal stable equilibria always exist, whose basins may be quite intermingled with those of the optimal equilibrium; then we introduce a structural change of the model by assuming that the Public Administration, besides its action as an intermediary between visitors and polluting firms, also performs a direct action for the pollution control. We show how the cost of this direct action of the Public Administration can be balanced by proper taxes and we prove that undesired equilibria can be ruled out by a suitable balance of financial instruments and direct actions of Public Administration for environmental remediation
Residential segregation: The role of inequality and housing subsidies
No full textResidential segregation is a key public policy issue that is driven by economic factors on the one side, and individual attitudes towards ethnic diversity on the other side. We assume a modeling framework that consists of a population of two ethnic groups, a rental market for each neighborhood, and household's utility which depends on consumption and housing. Accounting for income disparities and heterogeneous preferences for living in ethnically diverse neighborhoods, we examine the residential segregation patterns that occur when households make their neighborhood choice by taking economic and diversity related aspects into account. The investigation reveals that ethnic income disparities and heterogeneous preferences are antagonistic forces such that a certain level of income stratification is the price for residential integration. In light of these findings, we discuss to which extent and under which conditions housing subsidy policies can favor residential integration
Valuing strategic investments under stochastic interest rates: a real option approach
No full textOne of the most challenging issues in management is the valuation of strategic investments. In particular, when
undertaking projects such as an expansion or the launch of a new brand, or an investment in R&D and intellectual capital, which are characterized by a long-term horizon, a firm has also to face the risk due to the interest rate. In this work, we propose to value
investments subject to interest rate risk using a real options approach (Schulmerich, 2010). This task requires the typical
technicalities of option pricing, which often rely on complex and time-consuming techniques to value investment projects. For
instance, Schulmerich (2010) is, to the best of our knowledge, the first work where the interest rate risk is considered for real
option analysis. Nevertheless, the valuation of investment projects is done by employing binomial trees, which are
computationally very expensive. In the current paper, a different modeling framework (in continuous-time) for real option pricing
is proposed which allows one to account for interest rate risk and, at the same time, to reduce computational complexity. In
particular, the net present value of the cash inflows is specified by a geometric Brownian motion and the interest rate is modeled
by using a process of Vasicek type, which is calibrated to real market data. Such an approach yields an explicit formula for
valuing various kinds of investment strategies, such as the option to defer and the option to expand. Therefore, the one proposed is
the first model in the field of real options that accounts for the interest rate risk and, at the same time, offers an easy to
implement formula which makes the model itself very suitable for practitioners. An empirical analysis is presented which
illustrates the proposed approach from the practical point-ofview and highlights the impact of stochastic interest rates in
investment valuation
Does the volatility of interest rates affect the value of investment projects? A real option investigation
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A very efficient approach for pricing barrier options on an underlying described by the mixed fractional Brownian motion
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