Network economics and optimal replacement of age-structured IT capital (Q2460038)

The paper presents development of formerly published results in the study of vintage capital models. There is a better developed theory of the continuous vintage capital models to produce certain rules of the optimal replacement of information technologies capital. Unlike the previous works where the network economics is usually considered as a static game, the dynamic analysis of the network effects under technological change is performed. In doing so, a two-level hierarchical optimization problem is constructed. A few statements concerning solvability of this problem are proved. The capital scrapping time, investment and capital price are unknown in the problem. The obtained results are applied to the optimal replacement of firm's computer hardware.