Network economics and optimal replacement of age-structured IT capital |
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Authors: | Yu Yatsenko N Hritonenko |
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Institution: | (1) College of Business and Economics, Houston Baptist University, 7502 Fondren Road, Houston, TX 77074, USA;(2) Department of Mathematics, Prairie View A&M University, Box 0519, Prairie View, TX 77446, USA |
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Abstract: | The constructed hierarchical optimization model of vintage capital replacement takes into account network effects and the
age-dependent technological structure of capital equipment. It involves the control of a network coalition choice, endogenous
investments, capital structure, and capital lifetime. The qualitative analysis of the model shows how the lifetime and financial
structure of the IT capital depends on technological change. These results are relevant for strategic management on a firm
level. Provided numeric examples simulate the optimal lifetime of personal computers.
This research is partially supported by the NATO grant CLG 982209. |
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Keywords: | Optimization Integral equations Vintage capital models Equipment lifetime Network economics IT |
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