International Journal of Real Options and Strategy
Online ISSN : 2186-4667
ISSN-L : 2186-4667
Theoretical Paper
Pollutant Abatement Investment under Ambiguity in a Two-Period Model
Motoh Tsujimura
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2015 Volume 3 Pages 13-26

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Abstract

This paper investigates a pollutant abatement investment under ambiguity in a two-period setting. We consider a representative consumer and firm in an economy and formulate the social welfare maximization problem. Then we numerically derive the optimal level of abatement investment. Furthermore, we analyze the comparative static effects of the model parameters and find increased ambiguity encourages pollutant abatement investment.

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© 2015 The Japan Association of Real Options and Strategy
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