Using distributed optimal control in economics: A numerical approach based on the finite element method

Abstract

Abstract The finite element method is employed to transform a distributed optimal control problem into a discrete optimization problem which can be solved with standard mathematical techniques. We use distributed optimal control in order to determine the optimal selective logging regime of a privately owned non‐homogeneous forest. This regime has become nowadays a standard approach for the management of public forest. However, resource economists still have not come forward yet with an economic model for this widely applied management technique and base their economic analysis of the optimal management of a homogeneous forest on a clear cutting regime utilizing the Faustmann–Pressler–Ohlin Theorem. Copyright © 2001 John Wiley & Sons, Ltd.