A new decomposition method for multiregional economic equilibrium models

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Detail(s)

Original languageEnglish
Pages (from-to)643-655
Journal / PublicationOperations Research
Volume54
Issue number4
Publication statusPublished - Jul 2006

Abstract

This paper discusses decomposition of a multiregional economic equilibrium model that is characterized by a cost minimizing, linear programming (LP) model of the supply side and a vector-valued function that gives demand prices as functions of the quantities demanded. Our motivation is to ease model development and maintenance by a solution method that links separately developed regional models only when a consistent multiregion solution is desired. A heuristic strategy is described to extend any existing (LP) decomposition principle to a procedure for decomposing an equilibrium model by region. This strategy is applied to extend Dantzig-Wolfe decomposition to the multiregional economic equilibrium model, and several theoretical results are derived for the resulting algorithm. The central result is a proof of asymptotic convergence, under usefully general conditions. The extended Dantzig-Wolfe procedure is illustrated with an existing, two-region model of Canadian energy supplies and demands. © 2006 INFORMS.

Research Area(s)

  • Natural resources, energy: multiregional economic equilibrium models, Programming: decomposition, variational inequalities

Citation Format(s)

A new decomposition method for multiregional economic equilibrium models. / Chung, William; Fuller, J. D.; Wu, Y. June.

In: Operations Research, Vol. 54, No. 4, 07.2006, p. 643-655.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review