Document Type

Article

Journal/Book Title/Conference

Economics Research Institute Study Paper

Volume

95

Issue

13

Publisher

Utah State University Department of Economics

Publication Date

1995

First Page

1

Last Page

10

Abstract

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.


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