On Some Aspects of Land Development When the Decision to Develop is Divisible

The Arrow/Fisher/Henry/ study of land development in the presence of uncertainty has been conducted in a two period model in which the development decision is indivisible. Very recently, this study has been extended to analyze the development problem in a multi-period framework. Nevertheless, very little is known about the properties of the development decision when this decision is divisible. As such, this article has two goals. First, I discuss the divisible land development problem generally, and then in the context of minerals development in the USA. Next, I formally analyze the impact of divisibility on the land development decision over time and in the presence of uncertainty