On the Optimal Schedule for Introducing a New Technology
01 January 1992
A known, time-dependent output stream can be produced by either of two technologies. We ask: What mixture of these technologies should be used to minimize the discounted present value of the cost of production? Each technology is characterized by a unit cost function that declines with experience. Typically one of these functions (the NEW TECHNOLOGY) starts out higher, but has a lower final asymptote, than the other (the OLD TECHNOLOGY).