Introductory Optimization Dynamics

Book excerpt: Optimal Control theory has been increasingly used in Economi- and Management Science in the last fifteen years or so. It is now commonplace, even at textbook level. It has been applied to a great many areas of Economics and Management Science, such as Optimal Growth, Optimal Population, Pollution control, Natural Resources, Bioeconomics, Education, International Trade, Monopoly, Oligopoly and Duopoly, Urban and Regional Economics, Arms Race control, Business Finance, Inventory Planning, Marketing, Maintenance and Replacement policy and many others. It is a powerful tool of dynamic optimization. There is no doubt social sciences students should be familiar with this tool, if not for their own research, at least for reading the literature. These Lecture Notes attempt to provide a plain exposition of Optimal Control Theory, with a number of economic examples and applications designed mainly to illustrate the various techniques and point out the wide range of possible applications rather than to treat exhaustively any area of economic theory or policy. Chapters 2,3 and 4 are devoted to the Calculus of Variations, Chapter 5 develops Optimal Control theory from the Variational approach, Chapter 6 deals with the problems of constrained state and control variables , Chapter 7, with Linear Control models and Chapter 8, with stabilization models. Discrete systems are discussed in Chapter 9 and Sensitivity analysis in Chapter 10. Chapter 11 presents a wide range of Economics and Management Science applications.