A Decentralized General Equilibrium Model for Distributed Social Welfare in Mesoeconomics via Input Output Multiplex Networks

Ioannis Papastaikoudis, Prodromos Prodromidis, Jeremy Watson and I. Lestas

Janeway Institute Working Papers from Faculty of Economics, University of Cambridge

Abstract: We study a multicommodity trade and production model across multiple subeconomies, focusing on social welfare. Trade flows between subeconomies are represented by a multiplex network. This framework allows us to explore how production shocks in one subeconomy can impact others by examining the interconnected trade dimensions through a Leontief input-output model. The approach aligns with mesoeconomics, assuming cooperation among subeconomies to enhance welfare. We formulate the social welfare problem as a distributed optimization problem using the multiplex network Laplacian matrix and solve it with a primal-dual algorithm. The model functions as a decentralized general equilibrium system, encompassing the production process.

Keywords: Decentralized General Equilibrium; Multiplex Networks; Distributed Optimization; Mesoeconomics; Social Welfare (search for similar items in EconPapers)
JEL-codes: C61 C62 C67 D30 D50 D60 D85 R13 (search for similar items in EconPapers)
Date: 2025-02-01
New Economics Papers: this item is included in nep-pbe and nep-ure
Note: ip352
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camjip:2502

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