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Dispersed Spatial Price Equilibrium

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  • P T Harker

    (Department of Decision Sciences, The Wharton School, University of Pennsylvania, Philadelphia, PA 19104-6366, USA)

Abstract

The concept of a spatial price equilibrium has dominated the network-based models of spatial competition ever since Samuelson's (1952) formulation of this concept as a mathematical program. In practice, however, this model has often been a poor predictor of interregional flows and regional commodity prices. In this paper an extension of the spatial price equilibrium model is presented, in which attempts are made to overcome the poor predictive capabilities of this model by imbedding it within a gravity model representation of interregional flows. After the conceptual framework of this model is stated, a variational inequality formulation is presented and this formulation is then used to derive a convex mathematical programming statement of this model. Solution algorithms and sensitivity analysis of the equilibrium solution are discussed, and in the conclusion to the paper a discussion of the extensions of this model are presented which incorporate multiple commodities and imperfect competition in the regional commodity markets.

Suggested Citation

  • P T Harker, 1988. "Dispersed Spatial Price Equilibrium," Environment and Planning A, , vol. 20(3), pages 353-368, March.
    • Handle: RePEc:sae:envira:v:20:y:1988:i:3:p:353-368
    DOI: 10.1068/a200353
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    References listed on IDEAS

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    1. Jong-Shi Pang, 1981. "A Hybrid Method for the Solution of Some Multi-Commodity Spatial Equilibrium Problems," Management Science, INFORMS, vol. 27(10), pages 1142-1157, October.
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    3. Stella Dafermos & Anna Nagurney, 1984. "Sensitivity Analysis for the General Spatial Economic Equilibrium Problem," Operations Research, INFORMS, vol. 32(5), pages 1069-1086, October.
    4. Anas, Alex, 1983. "Discrete choice theory, information theory and the multinomial logit and gravity models," Transportation Research Part B: Methodological, Elsevier, vol. 17(1), pages 13-23, February.
    5. Smith, Tony E. & Friesz, Terry L., 1985. "Spatial market equilibria with flow-dependent supply and demand : The single commodity case," Regional Science and Urban Economics, Elsevier, vol. 15(2), pages 181-218, June.
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    Cited by:

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    2. Jang, Joonkyung, 1992. "A spatial equilibrium analysis of the impact of transportation costs and policy changes on the export of U.S. beef and feed grains," ISU General Staff Papers 1992010108000017632, Iowa State University, Department of Economics.
    3. Yang, Chin W. & Hwang, Ming J. & Sohng, Soong N., 2002. "The Cournot competition in the spatial equilibrium model," Energy Economics, Elsevier, vol. 24(2), pages 139-154, March.
    4. Kazuhiko Ishiguro & Hajime Inamura, 2001. "Development of ocean carriers' behaviour model focusing on their 'cost and tariff' based on the spatial general equilibrium," Maritime Policy & Management, Taylor & Francis Journals, vol. 28(3), pages 251-264, July.

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