General Equilibrium Models with Discrete Choices in a Spatial Continuum

M. Keyzer (), Y. Ermoliev () and V. Norkin ()
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M. Keyzer: Free University
Y. Ermoliev: International Institute for Applied Systems Analysis (IIASA)
V. Norkin: Institute of Cybernetics of the Ukrainian Academy of Sciences

A chapter in Coping with Uncertainty, 2006, pp 133-154 from Springer

Abstract: Abstract The treatment of spatial characteristics through probability distributions makes it possible to use stochastic optimization methods and to obtain efficiency results and competitive equilibrium prices for general equilibrium models with discrete choices in spatial continuum. Along these lines, and combining results from stochastic optimization with principles established by Aumann and Hildenbrand for economies with continuum of traders the paper develops a practical modeling framework that can combine the spatially distributed aspects of land-use with processes such as market clearing or telecommunication investments concentrated at specific points. It also presents associated stochastic algorithms for numerical implementation. We discuss both a general equilibrium version in which all consumers meet their own budget, and a welfare maximizing version with transfers adjusting among consumer groups for which we formulate a dual approach that solely depends on a finite number of prices.

Keywords: Spatial modelling; Continuum of agents; Discrete choice; General equilibrium; Welfare maximization; Dual welfare function; Stochastic tâtonnement (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnechp:978-3-540-35262-4_8

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DOI: 10.1007/3-540-35262-7_8

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