An algorithm for the multiperiod market equilibrium model with geometric distributed lag demand

This paper presents a new equilibrium-seeking algorithm, called the decoupling algorithm, for calculation of multiperiod equilibrium of supplies and demands when demand has a geometric distributed lag (GDL) structure and supply is represented by a linear process submodel. The new algorithm is required because it may be difficult to obtain the equilibrium by a diagonalization algorithm such as PIES. In each step of the decoupling algorithm, a modified GDL equilibrium model, the ‘decoupled submodel’, is solved by the PIES algorithm; successive approximations move closer to the true equilibrium. Two versions of a large-scale realistic model of North American energy supplies and demands are solved with the decoupling algorithm to aid in understanding the behavior of the decoupling algorithm.