Non-differentiable variational calculus (Dido's problem)

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I wonder what is the alternative to Euler-Lagrange equations when we have non-differentiability issues. I'll give an example:

Dido's problem can be stated as:

Find the figure bounded by a line which has the maximum area for a given perimeter.

The solution I've seen goes as follows.

Let's consider the $X$ axis to be the line and $y(x)$ the curve that encloses the figure. We want to optimize the area:

$$\int y(x) dx$$ A possible solution would be to apply Lagrange multipliers, where the constraint is:

$$\mathrm{perimeter}=\int\sqrt{1+y'^2(x)}dx $$

So the Lagrangian is:

$$L(y,y')=y+\lambda\sqrt{1+y'^2}$$

And we just have to apply Euler-Lagrange equations.

I have some doubts on the type of curves we are considering. For example, if the fuction takes negative values, the area would be:

$$\int|y(x)|dx$$

Which in general, will give rise to a non differentiable Lagrangian.

So it seems we are discarding non-differentiable curves and those with negative values. Is there any way to show this type of curves won't give rise to maximum area? I guess that if the function is at least piecewise differentiable, we could divide the intregral into several intervals. I'm fine if the proof is a bit handy wavy.