Article ID: | iaor1992988 |
Country: | Netherlands |
Volume: | 10 |
Issue: | 7 |
Start Page Number: | 369 |
End Page Number: | 376 |
Publication Date: | Oct 1991 |
Journal: | Operations Research Letters |
Authors: | Dafermos Stella, Zhao Lan |
In this paper the authors 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 in 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.