Computation of Particular Economic Equilibria.
Abstract
The computation of economic equilibria, given specific supply and demand functions, is a well-established problem normally treated by fixed point methods or other iterative schemes which converge to a point satisfying the equilibrium criteria. In cases where there are several points which satisfy the equilibrium criteria, these methods will produce a solution distinguished only by the characteristics of the method itself and the starting point used. For some applications, it is desirable to characterize a particular equilibrium point in the presence of multiple equilibria. In this paper, economies are considered with demand and supply characteristics which can be described in terms of separable functions (i.e., functions which are sums of functions each of a single variable) or in terms of functions which can be made separable by introducing new variables and equations. A recently developed branch and bound algorith, is applied to the problem of maximizing any of several separable objective functions (consumer surplus, producer surplus and total surplus are used, although others could be defined) subject to the equilibrium criteria, thus producing a particular equilibrium point. If there is more than one equilibrium point solution for a particular objective function, the branch and bound procedure will produce all such solutions.
Document Details
- Document Type
- Technical Report
- Publication Date
- Aug 01, 1976
- Accession Number
- ADA030167
Entities
People
- James E. Falk
- Jerome Bracken
Organizations
- Institute for Defense Analyses