Article ID: | iaor20041042 |
Country: | United States |
Volume: | 21 |
Issue: | 3 |
Start Page Number: | 675 |
End Page Number: | 696 |
Publication Date: | Aug 1996 |
Journal: | Mathematics of Operations Research |
Authors: | Talman D., Herings J.J., Yang Z.F. |
The equilibria of a model of an exchange economy with price rigidities are called constrained equilibria. A simplicial algorithm on the unit cube is proposed to compute an approximation of a continuum of zero points of the excess demand corrrespondence of such an economy. This continuum of zero points corresponds to a continuum of constrained equilibria of the economy, linking the two so-called trivial equilibria. Moreover, the convergence properties of the algorithm and the accuracy of the approximate constrained equilibria obtained by the algorithm are discussed. Finally, an example is given as an illustration.