Abstract
The basic Lucas model for risky R&D projects is revisited. New solutions for optimal expenditures are explored by exploiting the merits of the theory of differential equations. After applying the calculus of variations, a nonlinear differential equation is presented whose solution provides the optimal control for a constant conditional-completion density function and different time-dependent return models. New, exact, and approximate solutions are presented and discussed. It is found, for the class of risky R&D projects under study, that the behavior over time of the optimal expenditure is functionally similar to that of the expected return.
Original language | English |
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Pages (from-to) | 247-254 |
Number of pages | 8 |
Journal | R and D Management |
Volume | 30 |
Issue number | 3 |
DOIs | |
State | Published - 1 Jan 2000 |
ASJC Scopus subject areas
- Business and International Management
- General Business, Management and Accounting
- Strategy and Management
- Management of Technology and Innovation