Optimal dividends under Erlang(2) inter-dividend decision times

When studying the optimality of such strategies, the existing literature focuses exclusively on the special case of exponential - that is, Erlang(1) - inter-dividend decision times. Higher dimensional models are surprisingly difficult to study due to the implicit nature of some of the equations. While some of this difficulty continues to exist in high dimensions, in this paper we provide a stepping stone to the general Erlang(n) problem by providing a detailed analysis of the optimality of periodic barrier strategies when inter-dividend-decision times are Erlang(2) distributed. Results are illustrated.