Fleet replacement under technological shocks.

The paper analyzes a fleet replacement problem under general assumptions about technological improvement. The corresponding optimization model considers the variable lifetime of assets in deterministic infinite-horizon settings. The optimal dynamics of the asset lifetime and investment is investigated analytically and numerically under continuous technological change and technological shocks that affect the operating and new asset costs. The obtained results contribute to the OR replacement theory and suggest simple rules for the efficient fleet replacement under improving technology. [ABSTRACT FROM AUTHOR]