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Journal of Optimization Theory and Applications

, Volume 107, Issue 2, pp 275–286 | Cite as

Instabilities in Concave, Dynamic, Economic Optimization

  • G. Feichtinger
  • F. Wirl
Article

Abstract

An important and numerous literature argues that nonconcavity (often convexity with respect to the state) of the Hamiltonian leads to multiple steady states, instability, and a threshold. This threshold property provides a powerful paradigm to explain history dependency and hysteresis. This paper shows that economically relevant properties (in particular, multiple steady states and thresholds) are possible in strict concave models too. Two corresponding necessary conditions with intuitive economic interpretation are derived.

optimal control thresholds multiple equilibria instability concavity 

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Copyright information

© Plenum Publishing Corporation 2000

Authors and Affiliations

  • G. Feichtinger
    • 1
  • F. Wirl
    • 2
  1. 1.Institute of Econometrics, OR, and Systems TheoryVienna University of TechnologyViennaAustria
  2. 2.Faculty of Economics and ManagementOtto von Guericke University MagdeburgMagdeburgGermany

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