General economic equilibrium and variational inequalities

Authors:
Lan Zhao;Stella Dafermos
Affiliations:
Department of Mathematics, SUNY/College at Old Westbury, Old Westbury, NY 11568-0210, USA;Division of Applied Mathematics, Brown University, Providence, RI 02912, USA
Venue:
Operations Research Letters
Year:
1991

Citing 3
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Abstract

In this paper we apply the theory of variational inequalities to the general economic equilibrium problem. Qualitative properties of existence and uniqueness are established. Then the decomposition algorithm for the computation of the equilibrium point is proposed which decomposes the general economic equilibrium problem into two parts: in the first part, the equilibrium price is determined as a solution of a variational inequality with a compact feasible set; in the second part, the equilibrium activity level is determined as a solution of a set of linear inequalities. Finally, the convergence of the algorithm is established.