Optimal Transition Paths Toward Clean Technologies

Nastaran Ansari; Adriaan Van Zon; Olaf Sleijpen

Optimal Transition Paths Toward Clean Technologies

Nastaran Ansari^*, Adriaan Van Zon, Olaf Sleijpen

^*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceeding › Conference article in proceeding › Academic › peer-review

Abstract

The climate change problem has encouraged many researchers to extend the Ramsey model to discuss the transition from carbon-intensive technologies to carbon-free technologies. The heterogeneity of capital stocks and the irreversibility of investment are intrinsic features of such a transition. However, in the current literature, few studies considered these features in the Ramsey model, and this problem is considered qualitatively with a focus on steady-state properties rather than on transitional dynamics. In this paper, we show that finding the optimal transition path to carbon-free technology in the Ramsey model with irreversible investment requires solving an optimal control problem with a changing set of constraints over time that defines a multi-stage optimal control problem. We develop a two-stage optimal control model which allows the quantitative analysis of transitional dynamics in the Ramsey model with two kinds of capital (clean and dirty) and irreversible investment.

Original language	English
Title of host publication	38TH INTERNATIONAL CONFERENCE ON MATHEMATICAL METHODS IN ECONOMICS (MME 2020)
Editors	Svatopluk Kapounek, Hana Vránová
Publisher	Mendel University Brno
Pages	18-24
Number of pages	7
ISBN (Print)	9788075097347
Publication status	Published - 2020
Event	38th International Conference on Mathematical Methods in Economics (MME) - Brno, Czech Republic Duration: 9 Sept 2020 → 11 Sept 2020 https://mme2020.mendelu.cz/

Conference

Conference	38th International Conference on Mathematical Methods in Economics (MME)
Abbreviated title	MME 2020
Country/Territory	Czech Republic
City	Brno
Period	9/09/20 → 11/09/20
Internet address	https://mme2020.mendelu.cz/

JEL classifications

p28 - "Socialist Systems and Transitional Economies: Natural Resources; Energy; Environment"
c61 - "Optimization Techniques; Programming Models; Dynamic Analysis"

Keywords

Ramsey model
optimal control theory
heterogeneity of capital stocks
irreversible investment
multi-stage optimal control
GROWTH

Access to Document

https://mme2020.mendelu.cz/wcd/w-rek-mme/mme2020_conference_proceedings_final_final.pdf

Cite this

@inproceedings{4102870ad8734cba97dc5b9a7aae773c,

title = "Optimal Transition Paths Toward Clean Technologies",

abstract = "The climate change problem has encouraged many researchers to extend the Ramsey model to discuss the transition from carbon-intensive technologies to carbon-free technologies. The heterogeneity of capital stocks and the irreversibility of investment are intrinsic features of such a transition. However, in the current literature, few studies considered these features in the Ramsey model, and this problem is considered qualitatively with a focus on steady-state properties rather than on transitional dynamics. In this paper, we show that finding the optimal transition path to carbon-free technology in the Ramsey model with irreversible investment requires solving an optimal control problem with a changing set of constraints over time that defines a multi-stage optimal control problem. We develop a two-stage optimal control model which allows the quantitative analysis of transitional dynamics in the Ramsey model with two kinds of capital (clean and dirty) and irreversible investment.",

keywords = "Ramsey model, optimal control theory, heterogeneity of capital stocks, irreversible investment, multi-stage optimal control, GROWTH",

author = "Nastaran Ansari and {Van Zon}, Adriaan and Olaf Sleijpen",

year = "2020",

language = "English",

isbn = "9788075097347",

pages = "18--24",

editor = "Svatopluk Kapounek and Hana Vr{\'a}nov{\'a}",

booktitle = "38TH INTERNATIONAL CONFERENCE ON MATHEMATICAL METHODS IN ECONOMICS (MME 2020)",

publisher = "Mendel University Brno",

address = "Czech Republic",

note = "38th International Conference on Mathematical Methods in Economics (MME), MME 2020 ; Conference date: 09-09-2020 Through 11-09-2020",

url = "https://mme2020.mendelu.cz/",

}

Ansari, N, Van Zon, A & Sleijpen, O 2020, Optimal Transition Paths Toward Clean Technologies. in S Kapounek & H Vránová (eds), 38TH INTERNATIONAL CONFERENCE ON MATHEMATICAL METHODS IN ECONOMICS (MME 2020). Mendel University Brno, pp. 18-24, 38th International Conference on Mathematical Methods in Economics (MME), Brno, Czech Republic, 9/09/20. <https://mme2020.mendelu.cz/wcd/w-rek-mme/mme2020_conference_proceedings_final_final.pdf>

Optimal Transition Paths Toward Clean Technologies. / Ansari, Nastaran; Van Zon, Adriaan; Sleijpen, Olaf.
38TH INTERNATIONAL CONFERENCE ON MATHEMATICAL METHODS IN ECONOMICS (MME 2020). ed. / Svatopluk Kapounek; Hana Vránová. Mendel University Brno, 2020. p. 18-24.

Research output: Chapter in Book/Report/Conference proceeding › Conference article in proceeding › Academic › peer-review

TY - GEN

T1 - Optimal Transition Paths Toward Clean Technologies

AU - Ansari, Nastaran

AU - Van Zon, Adriaan

AU - Sleijpen, Olaf

PY - 2020

Y1 - 2020

N2 - The climate change problem has encouraged many researchers to extend the Ramsey model to discuss the transition from carbon-intensive technologies to carbon-free technologies. The heterogeneity of capital stocks and the irreversibility of investment are intrinsic features of such a transition. However, in the current literature, few studies considered these features in the Ramsey model, and this problem is considered qualitatively with a focus on steady-state properties rather than on transitional dynamics. In this paper, we show that finding the optimal transition path to carbon-free technology in the Ramsey model with irreversible investment requires solving an optimal control problem with a changing set of constraints over time that defines a multi-stage optimal control problem. We develop a two-stage optimal control model which allows the quantitative analysis of transitional dynamics in the Ramsey model with two kinds of capital (clean and dirty) and irreversible investment.

AB - The climate change problem has encouraged many researchers to extend the Ramsey model to discuss the transition from carbon-intensive technologies to carbon-free technologies. The heterogeneity of capital stocks and the irreversibility of investment are intrinsic features of such a transition. However, in the current literature, few studies considered these features in the Ramsey model, and this problem is considered qualitatively with a focus on steady-state properties rather than on transitional dynamics. In this paper, we show that finding the optimal transition path to carbon-free technology in the Ramsey model with irreversible investment requires solving an optimal control problem with a changing set of constraints over time that defines a multi-stage optimal control problem. We develop a two-stage optimal control model which allows the quantitative analysis of transitional dynamics in the Ramsey model with two kinds of capital (clean and dirty) and irreversible investment.

KW - Ramsey model

KW - optimal control theory

KW - heterogeneity of capital stocks

KW - irreversible investment

KW - multi-stage optimal control

KW - GROWTH

M3 - Conference article in proceeding

SN - 9788075097347

SP - 18

EP - 24

BT - 38TH INTERNATIONAL CONFERENCE ON MATHEMATICAL METHODS IN ECONOMICS (MME 2020)

A2 - Kapounek, Svatopluk

A2 - Vránová, Hana

PB - Mendel University Brno

T2 - 38th International Conference on Mathematical Methods in Economics (MME)

Y2 - 9 September 2020 through 11 September 2020

ER -