Abstract
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.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
We assume that the capital stock is always fully used for production.
References
J.-P. Amigues, A.A. Le Kama, M. Moreaux, Equilibrium transitions from non-renewable energy to renewable energy under capacity constraints. J. Econ. Dyn. Control. 55, 89–112 (2015)
H. Dawid, M. Keoula, M. Kopel, P.M. Kort, Product innovation incentives by an incumbent firm: a dynamic analysis. J. Econ. Behav. Organ. 117, 411–438 (2015)
E.J. Dockner, Local stability analysis in optimal control problems with two state variables, in Optimal Control Theory and Economic Analysis, ed. by G. Feichtinger, vol. 2 (North-Holland, Amsterdam, 1985), pp. 89–103
G. Feichtinger, R.F. Hartl, Optimale Kontrolle ökonomischer Prozesse: Anwendungen des Maximumprinzips in den Wirtschaftswisssenschaften (de Gruyter, Berlin, 1986)
G. Feichtinger, A. Novak, F. Wirl, Limit cycles in intertemporal adjustment models: theory and applications. J. Econ. Dyn. Control. 18, 353–380 (1994)
G. Feichtinger, R.F. Hartl, P.M. Kort, V.M. Veliov, Environmental policy, the porter hypothesis and the composition of capital: effects of learning and technological progress. J. Environ. Econ. Manag. 50, 434–446 (2005)
K. Georgiev, S. Margenov, V.M. Veliov, Emission control in single species air pollution problems, in Advances in Air Pollution Modeling for Environmental Security, ed. by I. Fargo, K. Georgiev, A. Havasi. NATO Science Series, IV Earth and Environmental Sciences, vol. 54 (Springer, Berlin, 2005), pp. 219–228
D. Grass, J.P. Caulkins, G. Feichtinger, G. Tragler, D.A. Behrens, Optimal Control of Nonlinear Processes (Springer, Berlin, 2008)
R.E. Lucas, Jr., Optimal investment policy and the flexible accelerator. Int. Econ. Rev. 8, 78–85 (1967)
E. Moser, W. Semmler, G. Tragler, V.M. Veliov, eds., Dynamic Optimization in Environmental Economics. Springer series Dynamic Modeling and Econometrics in Economics and Finance, vol. 15 (Springer, Berlin, 2014)
The Economist, Renewable energy: a world turned upside down. Feb 25th 2017
Y. Tsur, A. Zemel, On the dynamics of competing energy sources. Automatica 47(1), 1357–1365 (2011)
F. Wirl, (Monopolistic) resource extraction and limit pricing: the market penetration of competitively produced synfuels. Environ. Resour. Econ. 1, 157–178 (1991)
F. Wirl, Intertemporal inverstments into synfuels. Nat. Resour. Model. 21(3), 466–488 (2008)
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2018 Springer International Publishing AG, part of Springer Nature
About this chapter
Cite this chapter
Dawid, H., Hartl, R.F., Kort, P.M. (2018). Dynamic Models of the Firm with Green Energy and Goodwill. In: Feichtinger, G., Kovacevic, R., Tragler, G. (eds) Control Systems and Mathematical Methods in Economics. Lecture Notes in Economics and Mathematical Systems, vol 687. Springer, Cham. https://doi.org/10.1007/978-3-319-75169-6_14
Download citation
DOI: https://doi.org/10.1007/978-3-319-75169-6_14
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-75168-9
Online ISBN: 978-3-319-75169-6
eBook Packages: Economics and FinanceEconomics and Finance (R0)