Econometrica: Jan 1963, Volume 31, Issue 1

Efficient Accumulation of Capital for the Firm

https://doi.org/0012-9682(196301/04)31:1/2<131:EAOCFT>2.0.CO;2-9
p. 131-150

Edward Zabel

In this study dynamic programming is applied to the problem of efficient accumulation of capital for the firm. Considering a firm which has both a production decision and a capital decision each period, a variety of conditions are stated which yield the optimality of (S, s) or constant stock capital policies. Other conditions are given which require more complex capital policies, and a numerical example of a complex policy is presented as well.
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