Journal
ANNUAL REVIEW OF RESOURCE ECONOMICS
Volume 1, Issue -, Pages 219-238Publisher
ANNUAL REVIEWS
DOI: 10.1146/annurev.resource.050708.144103
Keywords
irreversibility; uncertainty; option value; quasi-option value; entrainment
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Three independent literatures have contributed to the understanding of irreversibility in economics. The first focuses on the future opportunities forgone by investments with irreversible consequences. The second considers irreversibility (and hysteresis) in the context of the dynamics of systems characterized by multiple equilibria. The third, with roots in complex systems theory, focuses on entrainment-a phenomenon recognized in economics as lock-in or lock-out. This paper disentangles the different strands in the economic analysis of irreversibility in order to identify the core ideas involved and to connect them to arguments in the parallel literatures on sustainability and uncertainty.
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