Sufficient conditions and sensitivity analysis for economic control problems

Second-order sufficient optimality conditions for nonlinear optimal control problems are reviewed. Applications of these conditions to convex–concave models of economic control are presented. On the basis of second-order conditions, recent stability results are discussed that ensure differentiability of optimal solutions with respect to perturbation parameters in the system. Methods for computing the sensitivity differentials of optimal solutions are outlined and numerical results for two economic control problems are given.