Optimal regime switching and threshold effects

Boucekkine, Raouf; Pommeret, Aude; Prieur, Fabien

doi:10.1016/j.jedc.2013.08.008

Cited by 39 publications

(39 citation statements)

References 20 publications

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“…Consistently with this latter result, the maximal utility π(0) does not depend on adoption and its mode (non significant coefficients for non adoption and for gradual adoption). As expected, this maximal utility is higher with initial abundant fossil resources (coefficient 0.06), which allow more consumption and lower pollution (coefficient −0.04), consistently with (1) (and consistent with Boucekkine et al (2013b)). A longer time horizon (term 0.014) increases π(0), because, from the first equation of (14), it is associated with adoption of renewable energy, which itself relieves the disutility brought by pollution.…”

Section: The Time Horizonsupporting

confidence: 85%

“…We shall notably find the importance of initial fossil resource and initial level of pollution in the maximal inter-temporal utility. This is consistent with Boucekkine et al (2013b) who use a different analysis. In addition, we shall also examine the role of the time horizon and the capacity to afford a gradual adoption.…”

Section: Introductionsupporting

confidence: 90%

“…Adoption or not of a renewable energy plays no role in the reversibility of pollution. The solutions having crossed the irreversibility threshold are associated with adoption, because, over the threshold, it is optimal to attenuate the lack of natural self-cleaning by a cleaner technology, a result also found by Boucekkine et al (2013b).…”

Section: Gradual Versus Instantaneousmentioning

confidence: 96%

“…The system {4, 5, 6, 7} constitutes a differential system in continuousdiscrete time, also called hybrid dynamic (Bensoussan and Menaldi, 1997) under constraints Boucekkine et al (2013b) considered an instantaneous transition to renewable resource, which amounts to replace (7) by:…”

Section: The Problemmentioning

confidence: 99%

“…Prieur et al (2011) searched for the optimal management of exhaustible resources under irreversible pol-3 lution but ignored the adoption of the new technology. In Boucekkine et al (2013b), the timing of adoption is endogenous but not the size of the investment in the technology of renewable energy. This assumption follows Valente (2011): when adoption starts, the share of renewable energy is set to a constant, reflecting the maximal level of the renewable energy allowed by the technological capacity of the country.…”

Section: Introductionmentioning

confidence: 99%

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Optimal transition to renewable energy with threshold of irreversible pollution

Bonneuil

Boucekkine

2016

European Journal of Operational Research

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When cheap fossil energy is polluting and pollutant no longer absorbed beyond a certain concentration, there is a moment when the * bonneuil@ined.fr † Raouf.Boucekkine@uclouvain.be 1 introduction of a cleaner renewable energy, although onerous, is optimal with respect to inter-temporal utility. The cleaner technology is adopted either instantaneously or gradually at a controlled rate. The problem of optimum under viability constraints is 6-dimensional under a continuous-discrete dynamic controlled by energy consumption and investment into production of renewable energy. Viable optima are obtained either with gradual or with instantaneous adoption. A longer time horizon increases the probability of adoption of renewable energy and the time for starting this adoption. It also increases maximal utility and the probability to cross the threshold of irreversible pollution. Exploiting a renewable energy starts sooner when adoption is gradual rather than instantaneous. The shorter the period remaining after adoption until the time horizon, the higher the investment into renewable energy.

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Section: The Time Horizonsupporting

confidence: 85%

Section: Introductionsupporting

confidence: 90%

Section: Gradual Versus Instantaneousmentioning

confidence: 96%

Section: The Problemmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Optimal transition to renewable energy with threshold of irreversible pollution

Bonneuil

Boucekkine

2016

European Journal of Operational Research

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Optimal Switching from Competition to Cooperation: A Preliminary Exploration

Boucekkine

Camacho

Zou

2020

Dynamic Economic Problems With Regime Switches

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In this paper, we tackle a generic optimal regime switching problem where the decision making process is not the same from a regime to another. Precisely, we consider a simple model of optimal switching from competition to cooperation. To this end, we solve a twostage optimal control problem. In the first stage, two players engage in a dynamic game with a common state variable and one control for each player. We solve for open-loop strategies with a linear state equation and linear-quadratic payoffs. More importantly, the players may also consider the possibility to switch at finite time to a cooperative regime with the associated joint optimization of the sum of the individual payoffs. Using theoretical analysis and numerical exercises, we study the optimal switching strategy from competition to cooperation. We also discuss the reverse switching.

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Optimal lockdown and vaccination policies to contain the spread of a mutating infectious disease

Prieur,

Ruan,

Zou

2023

Econ Theory

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We develop a piecewise deterministic control model to study optimal lockdown and vaccination policies to manage a pandemic. Lockdown is modeled as an impulse control that allows the system to switch from one restriction regime of restrictions to another. Vaccination policy is a continuous control. Decisions are taken under the risk of mutations of the disease, with repercussions on the transmission rate. The decision maker follows a cost minimization objective. We first characterize the optimality conditions for impulse control and show how the prospect of a mutation affects the decision maker's choice by inducing her to anticipate the relative benefit of a regime change after a mutation has occurred. Under some parametric conditions, our problem admits infinitely many value functions. We show the existence of a minimum value function that is a natural candidate to the solution given the nature of the problem.Focusing on this specific value function, we finally study the features of the optimal policy, especially the timing of impulse control. We prove that uncertainty surrounding future "bad" vs. "good" mutation of the disease expedites vs. delays the adoption of lockdown measures.

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Optimal regime switching and threshold effects

Cited by 39 publications

References 20 publications

Optimal transition to renewable energy with threshold of irreversible pollution

Optimal transition to renewable energy with threshold of irreversible pollution

Optimal Switching from Competition to Cooperation: A Preliminary Exploration

Optimal lockdown and vaccination policies to contain the spread of a mutating infectious disease

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