Planning for capacity expansion: Stochastic process and game-theoretic approaches

Abstract Under- and over-capacity design is a major consideration in public infrastructure systems. Traditional engineering economies of scale leading to overdesign errors must be counterbalanced by greater attention to high cost financing. Increased uncertainty in demand forecasting and financial markets make decision tools which incorporate measures of information imperfection more appropriate. These tools, however, do not lead to consistent identification of optimal design levels.

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