Computation of local equilibria on a network-based economic model

Abstract

Large scale economic systems can be described systematically and consistently by a network framework. However, the network-based economic model is hard to be applied to the system with multioutput production subsystems. To resolve this situation, a local equilibrium problem with a linearly approximated production function and a monotone decreasing demand function is considered in this thesis. To solve this type of problems, a heuristic approach is suggested, which searches for an equilibrium point by alternating between a supply adjustment operation a price adjustment operation. In each operation, the primal/dual feasibility is kept by minimum ratio tests and the complementary slackness is kept through projection procedures.