An Algorithm for the Multiperiod Market Equilibrium Model with Geometric Distributed Lag Demand

Y. June Wu and J. David Fuller
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Y. June Wu: Ryerson Polytechnic University, Toronto, Ontario, Canada
J. David Fuller: University of Waterloo, Waterloo, Ontario, Canada

Operations Research, 1996, vol. 44, issue 6, 1002-1012

Abstract: 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.

Keywords: economics; equilibrium models with geometric distributed lag demand; programming; nonlinear; sequences of NLPs to calculate economic equilibrium (search for similar items in EconPapers)
Date: 1996
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