Dynamic Models of the Firm with Green Energy and Goodwill with a Constant Size of the Output Market
This paper analyzes a dynamic model of the firm. We focus on the effect of investment in green energy. We explicitly take into account that green energy has a positive side effect, namely that it contributes to the goodwill of the firm and thus increases demand. Different models are proposed and the solutions range from monotonic saddle point convergence to history-dependent Skiba behavior.
KeywordsGreen capital Goodwill Optimal investment Skiba curve
The authors are grateful for helpful comments from two anonymous referees.
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