Computation of spatial equilibria with price controls

Abstract

The purpose of this paper is to develop an algorithm computing of the regional prices, quantities and interregional trades in a spatial equilibrium model when there exist price constraints. In the real world, the price regulation which perturbs the equilibrium prices and flows without any price regulation and causes market disequilibrium appears frequently. We approach the supposed model with the parametric method which is developed by Ahn and Seong, it finds an equilibrium prices and flows along the network given nonlinear excess demands and constant transport costs while satisfy the specified price constraints. The suggested method is a primal-dual type which is an extended concept of Bertseka``s (linear) network algorithm.