Joint Capacity Expansion Without Rearrangement

In problems of joint capacity expansion one must consider not only the cost of construction of facilities, but also the costs due to the conversion and rearrangement of facilities. In the analytical literature only conversion costs have been treated explicitly; rearrangement costs have been implicitly assumed to be negligible. This paper examines certain properties of the optimal policy over an infinite horizon in the case of prohibitive rearrangement costs.