Capitalist Investment with an Irreversibility Constraint.
HARVARD UNIV CAMBRIDGE MASS
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The current paper attempts to discuss the modern theory of capitalist investment in a simple mathematical fashion. It has now been demonstrated that puzzling mathematical difficulties can easily arise in rigorous treatments of the theory of neoclassical investment. These difficulties do not arise in every economic context, and, specifically, do not arise in certain problems which originate in the intertemporal theory of the firm. Pontryagins maximum principle is the main mathematical tool used in this analysis, as was the case with much of the precious literature. But this paper is not a survey in scope or intent, and reviews the earlier literature in order to clarify the mathematical difficulties which arise from the irreversibility constraint. Author
- Economics and Cost Analysis