An application of mathematical programming to the choice of investment: The Case of the Electric Power Industry in Korea

Abstract

The choice of investments has always been a major concern of economists and businessmen. Substantial development of analytical techniques for the choice of investments in public utilities has been achieved in recent years. The most important contributions have come from two newly developed techniques: cost-benefit analysis and mathematical programming. Cost-benefit analysis is a practical way of assessing the desirability of projects, where it is important to take a long view and a wide view. Although cost-benefit analysis has been useful in determining the desirability of multiple purpose projects, the scope of the analysis has mainly been restricted to the level of individual project evaluation.