Optimization of Economic Renovation

  • Natali Hritonenko
  • Yuri Yatsenko
Chapter
Part of the Springer Optimization and Its Applications book series (SOIA, volume 88)

Abstract

This chapter analyzes optimization problems in the economic models with heterogeneous capital and labor of  Chap. 4. Such models are important in explaining economic modernization under improving technology. Section 5.1 provides a qualitative analysis of the continuous-time optimization problem of one-machine replacement from Sect.  4.4 using standard tools of nonlinear optimization. Section 5.2 explores the optimal modernization of vintage capital in a profit-maximizing firm under environmental constraints. Section 5.3 investigates an optimization problem with nonlinear utility in the Ramsey vintage capital model of Sect.  4.2. A balanced growth regime is established and analyzed under exponential technology and labor. It possesses new properties compared to the linear utility case. Section 5.4 contains a mathematical appendix that derives extremum conditions for vintage capital models using variation techniques and Lagrange multipliers.

Keywords

Expense 

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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  • Natali Hritonenko
    • 1
  • Yuri Yatsenko
    • 2
  1. 1.Department of MathematicsPrairie View A&M UniversityPrairie ViewUSA
  2. 2.School of BusinessHouston Baptist UniversityHoustonUSA

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