Spatial economic networks with multicriteria producers and consumers: Statics and dynamics

Ding Zhang, June Dong and Anna Nagurney ()
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Ding Zhang: Department of Marketing and Management, School of Business, State University of New York at Oswego, Oswego, NY 13126, USA
June Dong: Department of Marketing and Management, School of Business, State University of New York at Oswego, Oswego, NY 13126, USA
Anna Nagurney: Department of Finance and Operations Management, Isenberg School of Management, University of Massachusetts, Amherst, MA 01003, USA

The Annals of Regional Science, 2002, vol. 36, issue 1, 79-105

Abstract: In this paper, we develop a framework for the formulation, analysis, and computation of solutions to spatial network problems in which the firms are multicriteria decision-makers and the consumers are as well. In particular, the firms, which are involved in the production of a homogeneous commodity, are spatially separated and weight the two criteria of profit maximization and total output maximization in distinct fashion. They are faced with the selection of modes/routes (which are modeled in an aggregated manner) to transport the commodity to the demand markets where consumers, consisting of different classes, consider the price charged by the producers and weight the transportation cost and the transportation time of the product on the links in an individual manner. We derive the governing equilibrium conditions and present the variational inequality formulation. We provide qualitative properties of the equilibrium commodity shipment and generalized price pattern and then propose a tatonnement process, which we formulate as a projected dynamical system. We give an algorithm for computational purposes and apply it to several numerical examples for illustration purposes. This paper is the first to integrate multicriteria decision-making on the production side and on the consumption side in a basic network context.

JEL-codes: C61 C62 C63 D50 L13 R10 (search for similar items in EconPapers)
Date: 2002-04-09
Note: Received: February 2001/Accepted: August 2001
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Citations: View citations in EconPapers (1)

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