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Optimal investment and location decisions of a firm in a flood risk area using impulse control theory
2018
Central European Journal of Operations Research
Flooding events can affect businesses close to rivers, lakes or coasts. This paper provides an economic partial equilibrium model, which helps to understand the optimal location choice for a firm in flood risk areas and its investment strategies. How often, when and how much are firms willing to invest in flood risk protection measures? We apply Impulse Control Theory and develop a continuation algorithm to solve the model numerically. We find that, the higher the flood risk and the more the
doi:10.1007/s10100-018-0532-0
pmid:31983895
pmcid:PMC6951472
fatcat:7fhdqlfmbvavjkprq2ddtyf2f4