Department of Mathematics
Solving over-production and supply-guarantee problems in economic equilibria
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.
Direct method, Implicit complementarity problem, Over-production, Spatial price equilibrium, Supply-guarantee
Source Publication Title
Networks and Spatial Economics
He, Bing-sheng, Wei Xu, Hai Yang, and Xiao-Ming Yuan. "Solving over-production and supply-guarantee problems in economic equilibria." Networks and Spatial Economics 11.1 (2011): 127-138.