Mean Field Social Control for Production Output Adjustment with Noisy Sticky Prices

Bing-Chang Wang () and Minyi Huang
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Bing-Chang Wang: Shandong University
Minyi Huang: Carleton University

Dynamic Games and Applications, 2024, vol. 14, issue 3, No 9, 716-732

Abstract: Abstract This paper is concerned with mean field social control for dynamic production adjustment. We first introduce a social control problem with many firms in a market, where the price is sticky and affected by random shocks. By tackling a centralized social control problem, we obtain a system of coupled forward–backward stochastic differential equations (FBSDEs). Decoupling the FBSDEs and applying mean field approximations, we design a set of decentralized strategies in terms of two Riccati equations. Such a set of decentralized strategies is shown to have asymptotic social optimality. The infinite-horizon problem is further considered and a neat condition is given to ensure asymptotic optimality of decentralized strategies.

Keywords: Mean field game; Socially optimal control; Production output adjustment; Noisy sticky price (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s13235-023-00512-z

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