THE IMPACT OF INFORMATION ON LAND DEVELOPMENT: A DYNAMIC AND STOCHASTIC ANALYSIS

In a two-period model, economists such as K.J. Arrow, A.C. Fisher, and C. Henry, have shown that when development is both indivisible and irreversible, a developer who ignores the possibility of obtaining new information about the outcome of such development will invariably underestimate the benefits of preservation and hence favor development. In this note, I extend the AFH analysis in two directions. I model the land development problem in a dynamic framework, explicitly specifying an information production function. In such a setting, I then ask and answer the question concerning when development should take place. Forthcoming in Journal of Environmental Management


Issue Date:
1995
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/28356
Total Pages:
10
JEL Codes:
D82; Q20
Series Statement:
ERI Study Paper 95-13




 Record created 2017-04-01, last modified 2017-11-21

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