Analysis of Finite Difference Approximations of an Optimal Control Problem in Economics

Analysis of Finite Difference Approximations of an Optimal Control Problem in Economics

Year:    2019

Author:    Alexander Lapin, Shuhua Zhang, Sergey Lapin, Na Yan

Advances in Applied Mathematics and Mechanics, Vol. 11 (2019), Iss. 6 : pp. 1358–1375

Abstract

We consider an optimal control problem which serves as a mathematical model for several problems in economics and management. The problem is the minimization of a continuous constrained functional governed by a linear parabolic diffusion-advection equation controlled in a coefficient in advection part. The additional constraint is non-negativity of a solution of state equation. We construct and analyze several mesh schemes approximating the formulated problem using finite difference methods in space and in time. All these approximations keep the positivity of the solutions to mesh state problem, either unconditionally or under some additional constraints to mesh steps. This allows us to remove corresponding constraint from the formulation of the discrete problem to simplify its implementation. Based on theoretical estimates and numerical results, we draw conclusions about the quality of the proposed mesh schemes.

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Journal Article Details

Publisher Name:    Global Science Press

Language:    English

DOI:    https://doi.org/10.4208/aamm.OA-2018-0186

Advances in Applied Mathematics and Mechanics, Vol. 11 (2019), Iss. 6 : pp. 1358–1375

Published online:    2019-01

AMS Subject Headings:    Global Science Press

Copyright:    COPYRIGHT: © Global Science Press

Pages:    18

Keywords:    Mean field game optimal control problem parabolic diffusion-advection equation finite difference methods.

Author Details

Alexander Lapin

Shuhua Zhang

Sergey Lapin

Na Yan

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