A remark on R.S. Pindyck: "Irreversibilities and the timing of environmental policy"

Abstract

This note adresses R.S. Pindyck: "Irreversibilities and the timing of environmental policy", Resource and Energy Economics, 22 (2000) 233-259: For the case of quadratic environmental cost, it is shown that the value function is not as claimed, nor of the suggested form. The solution in the case of linear environmental cost is affirmed with a complete proof. An additional expression is corrected.Environmental policy Uncertainty Irreversibilities Optimization