Title
Skiba points in free end-time problems Skiba points in free end-time problems
Author
Faculty/Department
Faculty of Applied Economics
Publication type
article
Publication
Amsterdam ,
Subject
Economics
Source (journal)
Journal of economic dynamics and control. - Amsterdam
Volume/pages
51(2015) , p. 404-419
ISSN
0165-1889
ISI
000349576900022
Carrier
E
Target language
English (eng)
Full text (Publishers DOI)
Affiliation
University of Antwerp
Abstract
Since the end of the seventies Skiba points have been studied in infinite time optimal control problems with multiple steady states. At such a Skiba point the decision maker is indifferent between choosing trajectories that approach different steady states. This paper extends this theory towards free end-time optimal control problems, where the decision maker collects a salvage value at the endogenous horizon date. In particular, besides operating forever, the decision maker can choose to stop operations immediately, or to operate during a finite time interval after which the decision maker stops and collects a salvage value. This paper illustrates the new theory with a firm-level capital accumulation problem in which the manager has the option to sell the firm (be acquired) at any time. This situation may be relevant for certain high-tech start-ups that create intellectual property which may be of value to an acquiring firm and which is hard for an outside firm to tap in other ways (e.g., via licensing). (C) 2014 Elsevier B.V. All rights reserved.
E-info
http://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcApp=PARTNER_APP&SrcAuth=LinksAMR&KeyUT=WOS:000349576900022&DestLinkType=RelatedRecords&DestApp=ALL_WOS&UsrCustomerID=ef845e08c439e550330acc77c7d2d848
http://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcApp=PARTNER_APP&SrcAuth=LinksAMR&KeyUT=WOS:000349576900022&DestLinkType=FullRecord&DestApp=ALL_WOS&UsrCustomerID=ef845e08c439e550330acc77c7d2d848
https://repository.uantwerpen.be/docman/iruaauth/7a0876/861125313.pdf
http://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcApp=PARTNER_APP&SrcAuth=LinksAMR&KeyUT=WOS:000349576900022&DestLinkType=CitingArticles&DestApp=ALL_WOS&UsrCustomerID=ef845e08c439e550330acc77c7d2d848
Handle