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J. Grames, D. Grass, P. Kort, A. Fürnkranz-Prskawetz:
"Firms optimal location choice considering flood risk and impulse investments in flood defense";
Talk: 11th BiGSEM Doctoral Workshop on Economic Theory, Bielefeld; 2016-12-05 - 2016-12-06.

Flooding events can a ect industries close to rivers or coasts. Therefore the location choice of fi rms is important given a certain flood risk based on naturogenic and anthropogenic factors.
We therefore build up a model where we consider a possible flood at an unknown time in a fi rms pro t maximizing problem. The fi rm chooses optimal investment in physical capital and impulse investments in flood defense capital. We apply Impulse Control Theory to analytically and numerically solve the model, where timing and amount of investments are chosen by the fi rm. With a numeric continuation algorithm we choose the optimal location for the fi rm. We fi nd that investments in flood defense are only optimal if the rm simultaneously invests in physical capital and maintenance of flood protection. We proof these results analytically and provide numerical solutions.

optimal investment, location choice, flood, socio-hydrology, Impulse Control Theory