IDEAS home Printed from https://ideas.repec.org/a/inm/oropre/v54y2006i4p643-655.html
   My bibliography  Save this article

A New Decomposition Method for Multiregional Economic Equilibrium Models

Author

Listed:
  • William Chung

    (Department of Management Sciences, City University of Hong Kong, Kowloon Tong, Hong Kong, China)

  • J. D. Fuller

    (Department of Management Sciences, University of Waterloo, Waterloo, Ontario, Canada N2L 3G1)

  • Y. June Wu

    (Department of Mechanical and Industrial Engineering, Ryerson University, Toronto, Ontario, Canada M5B 2K3)

Abstract

This paper discusses decomposition of a multiregional economic equilibrium model that is characterized by a cost minimizing, linear programming (LP) model of the supply side and a vector-valued function that gives demand prices as functions of the quantities demanded. Our motivation is to ease model development and maintenance by a solution method that links separately developed regional models only when a consistent multiregion solution is desired. A heuristic strategy is described to extend any existing (LP) decomposition principle to a procedure for decomposing an equilibrium model by region. This strategy is applied to extend Dantzig-Wolfe decomposition to the multiregional economic equilibrium model, and several theoretical results are derived for the resulting algorithm. The central result is a proof of asymptotic convergence, under usefully general conditions. The extended Dantzig-Wolfe procedure is illustrated with an existing, two-region model of Canadian energy supplies and demands.

Suggested Citation

  • William Chung & J. D. Fuller & Y. June Wu, 2006. "A New Decomposition Method for Multiregional Economic Equilibrium Models," Operations Research, INFORMS, vol. 54(4), pages 643-655, August.
    • Handle: RePEc:inm:oropre:v:54:y:2006:i:4:p:643-655
    DOI: 10.1287/opre.1060.0274
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/opre.1060.0274
    Download Restriction: no
    File URL: https://libkey.io/10.1287/opre.1060.0274?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Steven A. Gabriel & Andy S. Kydes & Peter Whitman, 2001. "The National Energy Modeling System: A Large-Scale Energy-Economic Equilibrium Model," Operations Research, INFORMS, vol. 49(1), pages 14-25, February.
    2. Chung, W. & Wu, Y. June & Fuller, J. David, 1997. "Dynamic energy and environment equilibrium model for the assessment of CO2 emission control in Canada and the USA," Energy Economics, Elsevier, vol. 19(1), pages 103-124, March.
    3. Frederic H. Murphy & Murthy V. Mudrageda, 1998. "A Decomposition Approach for a Class of Economic Equilibrium Models," Operations Research, INFORMS, vol. 46(3), pages 368-377, June.
    4. Wu, Y.June & Chung, William, 1997. "Assessing the control of energy-related CO2 emissions with a dynamic energy process model," Energy, Elsevier, vol. 22(7), pages 693-704.
    5. Barton, Russell R. & Hearn, Donald W. & Lawphongpanich, Siriphong, 1989. "The equivalence of transfer and generalized benders decomposition methods for traffic assignment," Transportation Research Part B: Methodological, Elsevier, vol. 23(1), pages 61-73, February.
    6. Byong-Hun Ahn & William W. Hogan, 1982. "On Convergence of the PIES Algorithm for Computing Equilibria," Operations Research, INFORMS, vol. 30(2), pages 281-300, April.
    7. Lawphongpanich, Siriphong & Hearn, Donald W., 1984. "Simplical decomposition of the asymmetric traffic assignment problem," Transportation Research Part B: Methodological, Elsevier, vol. 18(2), pages 123-133, April.
    8. Frederic H. Murphy, 1993. "Making Large-Scale Models Manageable: Modeling from an Operations Management Perspective," Operations Research, INFORMS, vol. 41(2), pages 241-252, April.
    9. Frederic H. Murphy, 1973. "Column Dropping Procedures for the Generalized Programming Algorithm," Management Science, INFORMS, vol. 19(11), pages 1310-1321, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. William Chung, 2024. "Truncated Dantzig–Wolfe Decomposition for a Class of Constrained Variational Inequality Problems," Computational Economics, Springer;Society for Computational Economics, vol. 64(1), pages 81-104, July.
    2. Fuller, J. David & Chung, William, 2008. "Benders decomposition for a class of variational inequalities," European Journal of Operational Research, Elsevier, vol. 185(1), pages 76-91, February.
    3. William Chung & J. David Fuller, 2010. "Subproblem Approximation in Dantzig-Wolfe Decomposition of Variational Inequality Models with an Application to a Multicommodity Economic Equilibrium Model," Operations Research, INFORMS, vol. 58(5), pages 1318-1327, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. J. Fuller & William Chung, 2005. "Dantzig—Wolfe Decomposition of Variational Inequalities," Computational Economics, Springer;Society for Computational Economics, vol. 25(4), pages 303-326, June.
    2. W. Chung & J. Fuller & Y. Wu, 2003. "A New Demand-Supply Decomposition Method for a Class of Economic Equilibrium Models," Computational Economics, Springer;Society for Computational Economics, vol. 21(3), pages 231-243, June.
    3. Fuller, J. David & Chung, William, 2008. "Benders decomposition for a class of variational inequalities," European Journal of Operational Research, Elsevier, vol. 185(1), pages 76-91, February.
    4. William Chung & J. David Fuller, 2010. "Subproblem Approximation in Dantzig-Wolfe Decomposition of Variational Inequality Models with an Application to a Multicommodity Economic Equilibrium Model," Operations Research, INFORMS, vol. 58(5), pages 1318-1327, October.
    5. William Chung, 2024. "Truncated Dantzig–Wolfe Decomposition for a Class of Constrained Variational Inequality Problems," Computational Economics, Springer;Society for Computational Economics, vol. 64(1), pages 81-104, July.
    6. Wu, Y. June & Chung, William & Fuller, J. David, 2000. "Decomposing multi-regional dynamic energy process models," Applied Energy, Elsevier, vol. 66(3), pages 225-235, July.
    7. Steven A. Gabriel & Andy S. Kydes & Peter Whitman, 2001. "The National Energy Modeling System: A Large-Scale Energy-Economic Equilibrium Model," Operations Research, INFORMS, vol. 49(1), pages 14-25, February.
    8. Wu, Y. June & Rosen, Marc A., 1999. "Assessing and optimizing the economic and environmental impacts of cogeneration/district energy systems using an energy equilibrium model," Applied Energy, Elsevier, vol. 62(3), pages 141-154, March.
    9. Egging, Rudolf G. & Gabriel, Steven A., 2006. "Examining market power in the European natural gas market," Energy Policy, Elsevier, vol. 34(17), pages 2762-2778, November.
    10. William W. Hogan, 2002. "Energy Modeling for Policy Studies," Operations Research, INFORMS, vol. 50(1), pages 89-95, February.
    11. Chung, William, 2002. "WWW-WATEMS-GDL: an internet modelling system for energy policy models," Energy, Elsevier, vol. 27(6), pages 569-577.
    12. Gabriel, Steven A. & Vikas, Shree & Ribar, David M., 2000. "Measuring the influence of Canadian carbon stabilization programs on natural gas exports to the United States via a 'bottom-up' intertemporal spatial price equilibrium model," Energy Economics, Elsevier, vol. 22(5), pages 497-525, October.
    13. Gabriel, Steven A. & Zhuang, Jifang & Kiet, Supat, 2005. "A large-scale linear complementarity model of the North American natural gas market," Energy Economics, Elsevier, vol. 27(4), pages 639-665, July.
    14. GABRIEL, Steven & SMEERS, Yves, 2005. "Complementarity problems in restructured natural gas markets," LIDAM Discussion Papers CORE 2005037, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    15. Meng Li & Guowei Hua & Haijun Huang, 2018. "A Multi-Modal Route Choice Model with Ridesharing and Public Transit," Sustainability, MDPI, vol. 10(11), pages 1-14, November.
    16. Richard P. van Leeuwen & Annelies E. Boerman & Edmund W. Schaefer & Gerwin Hoogsteen & Yashar S. Hajimolana, 2022. "Model Supported Business Case Scenario Analysis for Decentral Hydrogen Conversion, Storage and Consumption within Energy Hubs," Energies, MDPI, vol. 15(6), pages 1-22, March.
    17. Thompson, James R. & Frezza, Damon & Necioglu, Burhan & Cohen, Michael L. & Hoffman, Kenneth & Rosfjord, Kristine, 2019. "Interdependent Critical Infrastructure Model (ICIM): An agent-based model of power and water infrastructure," International Journal of Critical Infrastructure Protection, Elsevier, vol. 24(C), pages 144-165.
    18. Dial, Robert B., 1997. "Bicriterion traffic assignment: Efficient algorithms plus examples," Transportation Research Part B: Methodological, Elsevier, vol. 31(5), pages 357-379, October.
    19. Lopion, Peter & Markewitz, Peter & Robinius, Martin & Stolten, Detlef, 2018. "A review of current challenges and trends in energy systems modeling," Renewable and Sustainable Energy Reviews, Elsevier, vol. 96(C), pages 156-166.
    20. William W. Hogan, 2013. "Electricity Scarcity Pricing Through Operating Reserves," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:oropre:v:54:y:2006:i:4:p:643-655. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.