Optimal Investment Scheduling with Price-Sensitive Dynamic Demand

A model is developed that integrates capital investment decisions with output and pricing decisions for a situation of growing demand. Conditions are derived for the model that permit application of a general approach for determining the optimal sequence and timing of investments in a continuous-time framework. The behavior of optimal pricing and output decisions is characterized analytically. Specific results are given for a quadratic cost and revenue case, and an example illustrates the form of a solution. Possible extensions of the model are also discussed.

• 저널Management Science · 23(1) · 1–11
• 토픽Economic theories and models · Economics and Econometrics
• DOI10.1287/mnsc.23.1.1
• 저자Donald Erlenkotter, Robert R. Trippi