Dynamic Policies of the Firm: An Optimal Control Approach

A. State of the Art.- 1. Introduction.- 1. Scope of the book.- 2. Nature of the theory of the firm and of this book.- 3. Outline of the book.- 2. A Survey of Dynamic Theories of the Firm.- 1. Introduction.- 2. Shareholders.- 3. Management.- 4. Employees.- 5. Labour market.- 6. Output market.- 7. Competitors.- 8. Lenders of debt money.- 9. Suppliers of assets.- 10. Government.- 11. Macro-economic data.- 12. Summary.- 3. Some Predecessors.- 1. Introduction.- 2. Investments and depreciation (Jorgenson).- 3. Investments and adjustment costs (Gould).- 4. Production and finance I (Leland).- 5. Finance and the value of the firm (Ludwig).- 6. Production and finance II (Lesourne & Leban).- 7. Optimal firm behaviour during a business cycle (Leban & Lesourne).- 8. Technological progress in vintage models of the firm.- 9. Summary.- B. Investment and Finance.- 4. A Dynamic Model of the Firm.- 1. Introduction.- 2. Production, sales and operating income.- 3. Financing and taxes.- 4. Policy of the firm.- 5. The model.- 6. Further assumptions.- 7. The Maximum Principle.- 8. Optimal solution.- 9. Basic trajectory.- 10. Consolidation.- 11. Summary.- 5. Investment and Finance.- 1. Introduction.- 2. Personal Taxation.- 2.1. The model.- 2.2. Optimal solution.- 2.3. Summary.- 3. Net present value concept.- 3.1. Corporate finance theory.- 3.2. NPV concept and the model of Chapter 4.- 3.3. Summary.- 4. Adjustment costs.- 4.1. The theory of adjustment costs.- 4.2. A self-financing firm facing convex adjustment costs.- 4.2.1. The model and its solution.- 4.2.2. NPV concept and further analysis.- 4.3. Summary.- 5. Summary.- C. Production.- 6. Production, Employment, Finance and Investment.- 1. Introduction.- 2.The model.- 3. Further assumptions.- 4. Optimal solution.- 5. Basic trajectory and consolidation.- 6. Depth investments.- 7. Depth investments and consolidation.- 8. Summary.- 7. A Further Analysis.- 1. Introduction.- 2. Optimal decision rules.- 2.1. Production.- 2.2. Financial structure.- 2.3. Investment and dividend.- 3. Environmental influence on the trajectory of the firm.- 3.1. Reallocations.- 3.2. Final output.- 3.3. Consolidation.- 3.4. Expansion.- 3.5. Substitution.- 3.6. Financial substitution.- 4. Inluence of (sets of) environmental parameters.- 4.1. Corporation profit tax rate.- 4.2. Investment grant rate.- 4.3. Abolishing investment grants.- 4.4. Financial parameters.- 4.5. Wage rate.- 5. Summary.- 8. Production, Pollution, Finance and Investment.- 1. Introduction.- 2. The model.- 3. Optimal trajectories.- 3.1. Introduction.- 3.1.1. Financing costs.- 3.1.2. Technology.- 3.1.3. Environmental policy.- 3.2. Weak environmental policy of the government.- 3.3. Strong environmental policy of the government.- 3.4. Total set of trajectories.- 4. Conclusions.- D. Dynamic and Risky Environment.- 9. Production, Finance and Investment During a Business Cycle.- 1. Introduction.- 2. Assumptions.- 3. The model and relevant paths.- 4. Optimal solution.- 4.1. Introduction.- 4.2. A 'light' recession.- 4.3. A 'moderate' recession.- 4.4. A 'severe' recession.- 5. Summary.- 10. Production and Investment with Technological Progress.- 1. Introduction.- 2.The model and its optimality conditions.- 2.1. Vintages and taxes.- 2.2. The model.- 2.3. Lifetime of the eldest vintage.- 2.4. Optimization problem.- 2.5. Optimality conditions.- 3. Scrapping condition.- 3.1. A general scrapping condition.- 3.2. Interpretation.- 3.3. Another derivation.- 4. Steady state solution.- 5. Limitations to the coupling procedure.- 6. Summary.- 11. Production, Finance and Investment When Demand is Uncertain.- 1. Introduction.- 2.The model.- 3. Solution.- 4. Summary.- 12. Epilogue.- Appendix 1. An Interpretation of the Maximum Principle.- 1. Introduction.- 2. Technical terms.- 3. The Maximum Principle of Pontryagin.- 4. Mixed control constraints.- 5. Pure state constraints.- 6. Problems with infinite horizon.- Appendix 2. Solutions of the Models of Chapter 3.- 1. Introduction.- 2. A general solution procedure.- 3. The model of Jorgenson.- 4. The model of Gould.- 5. The model of Ludwig.- 6. The model of Lesourne and Leban.- 7. The model (s) of Leban and Lesourne.- 8. The model of Nickell.- 9. Summary.- Appendix 3. Solution of the Model of Chapter 4: A Step by Step Description.- 1. A reduced form of the model.- 2. Optimality conditions.- 3. Infeasible paths.- 4. Feasible paths.- 5. Final paths.- 6. Coupling procedure.- 6.1. Strings ending with path 5.- 6.2. Strings ending with path 4.- 7. Summary.- Appendix 4. Solutions of the Models in Chapters 5, 6 and 8: The Main Lines.- 1. Personal taxation model.- 2. NPV formulas of the model of Chapter 4.- 3. Convex adjustment costs.- 3.1. Optimal trajectories.- 3.2. Net present value formulas.- 3.3. Extension of the planning period.- 3.4. Infinite time horizon.- 4. The model of Chapter 6.- 5. Pollution model.- 5.1. Reformulation of the model.- 5.2. Solution procedure.- Appendix 5. Specific Problems in Solving the Models of Chapters 9 and 10.- 1. Solution of the model of Chapter 9.- 1.1. Optimality conditions.- 1.2. String 1002D2-1.- 1.3. String 1-2-3-2-1.- 2. The Maximum Principle for the model in Chapter 10.- 2.1. The model.- 2.2. The trie.- 2.3. Necessary optimality conditions for a special case.- 2.4. Necessary conditions for the general model.- 3. Existence of steady state solution in Section 10.4.- Appendix 6. Stochastic Dynamic Programming and the Additional Solutions and Mathematical Proofs of Chapter 11.- 1. Stochastic dynamic programming.- 2. Additional solutions and mathematical proofs.- List of Symbols.- References.- Author Index.