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Document Type

Journal Article

Department/Unit

Department of Mathematics

Title

Solving over-production and supply-guarantee problems in economic equilibria

Language

English

Abstract

The classical Spatial Price Equilibrium of economic markets may result in over-production at supply markets and under-supply at demand markets. This paper considers the policy instruments of levying taxes at supply markets to avoid over-production and granting subsidy for traders to guarantee supply at demand markets. The decision process of determining appropriate rates of tax and subsidy is characterized by an implicit complementarity problem. Consequently, a direct type algorithm is applied to solve the complementarity model. Preliminary numerical results are also reported. © 2009 Springer Science+Business Media, LLC.

Keywords

Direct method, Implicit complementarity problem, Over-production, Spatial price equilibrium, Supply-guarantee

Publication Date

2011

Source Publication Title

Networks and Spatial Economics

Volume

11

Issue

1

Start Page

127

End Page

138

Publisher

Springer Verlag

ISSN (print)

1566113X

ISSN (electronic)

15729427

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