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A dynamic programming approach to optimal pollution control under uncertain irreversibility: The Poisson case

Author

Listed:
  • Raouf Boucekkine

    (Rennes School of Business)

  • Carmen Camacho

    (Paris School of Economics & CNRS)

  • Weihua Ruan

    (Purdue University Northwest)

  • Benteng Zou

    (Université du Luxembourg)

Abstract

We solve a bimodal optimal control problem with a non-concavity and uncertainty through a Poisson process underlying the transition from a mode to another. We use a dynamic programming approach and are able to uncover the global optimal dynamics (including optimal non-monotonic paths) under a few linear-quadratic assumption, which do not get rid of the non-concavity of the problem. This is in contrast to the related literature on pollution control under irreversibility which usually explores local dynamics along monotonic solution paths to first-order Pontryagin conditions.

Suggested Citation

  • Raouf Boucekkine & Carmen Camacho & Weihua Ruan & Benteng Zou, 2022. "A dynamic programming approach to optimal pollution control under uncertain irreversibility: The Poisson case," DEM Discussion Paper Series 22-10, Department of Economics at the University of Luxembourg.
    • Handle: RePEc:luc:wpaper:22-10
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    File URL: http://hdl.handle.net/10993/51922
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    References listed on IDEAS

    as
    1. Raouf Boucekkine & Aude Pommeret & Fabien Prieur, 2013. "Technological vs. Ecological Switch and the Environmental Kuznets Curve," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(2), pages 252-260.
    2. Alain Ayong Le Kama & Aude Pommeret & Fabien Prieur, 2014. "Optimal Emission Policy under the Risk of Irreversible Pollution," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(6), pages 959-980, December.
    3. Alain Ayong Le Kama & Aude Pommeret & Fabien Prieur, 2014. "Optimal Emission Policy under the Risk of Irreversible Pollution," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(6), pages 959-980, December.
    4. Raouf Boucekkine & Aude Pommeret & Fabien Prieur, 2013. "Technological vs. Ecological Switch and the Environmental Kuznets Curve," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(2), pages 252-260.
    5. Tahvonen, Olli & Withagen, Cees, 1996. "Optimality of irreversible pollution accumulation," Journal of Economic Dynamics and Control, Elsevier, vol. 20(9-10), pages 1775-1795.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Multi-stage optimal control; Poisson process; HJB equations; irreversible pollution.;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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