Abstract
This paper develops an optimal control model for the firm's decision‐making concerning pollution control spending, employment and investment. The model explicitly considers the impact of adjustment costs of changing the level of the pollution stock and involves three state variables and two control variables. Necessary conditions are derived by the maximum principle. The results include an optimal employment‐investment‐pollution abatement programme, an optimal pollution control decision rule, the equilibrium optimal pollution control and spending plan, and the equilibrium employment‐investment decision.
| Original language | English |
|---|---|
| Pages (from-to) | 21-36 |
| Number of pages | 16 |
| Journal | Optimal Control Applications and Methods |
| Volume | 8 |
| Issue number | 1 |
| DOIs | |
| State | Published - 1987 |
Keywords
- Adjustment costs
- Maximum principle
- Optimal employment‐investment plan
- Pollution control
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