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2. The impact of information on land development: a dynamic and stochastic analysis
- Collection:
- Agricultural Communications Documentation Center (ACDC)
- Contributers:
- Batabyal, A.A. (author)
- Format:
- Research paper
- Publication Date:
- 1995-09
- Published:
- USA
- Location:
- Agricultural Communications Documentation Center, Funk Library, University of Illinois Box: 107 Document Number: C10135
- Notes:
- search from AgEcon., ERI Study Paper 95-13. September 1995 10 pages; Adobe Acrobat PDF 57K bytes, 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. JEL Classification: D82, Q20 Key words: development, dynamic, information, uncertainty Forthcoming in Journal of Environmental Management