Degenerate Evolution Equations in Weighted Continuous Function Spaces, Markov Processes and the Black-Scholes Equation — Part I

Abstract

The present paper is mainly devoted to the study of initial boundary problems associated with a wide class of degenerate second-order differential operators on real intervals, in the framework of weighted continuous function spaces. Such operators are of particular interest, since they often occur, for instance, while building up theoretical models in Mathematical Finance. In order to develop our approach, essentially based on semigroup theory, we provide here some general tools which, perhaps, cover an interest on their own, being concerned with the generation of positive strongly continuous semigroups and their deep connection with Markov processes, in the setting of weighted spaces of continuous functions on a locally compact space.