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

Author

Listed:
  • Papastaikoudis, I.
  • Prodromidis, P.
  • Watson, J.
  • Lestas, I.

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.

Suggested Citation

  • Papastaikoudis, I. & Prodromidis, P. & Watson, J. & Lestas, I., 2025. "A Decentralized General Equilibrium Model for Distributed Social Welfare in Mesoeconomics via Input Output Multiplex Networks," Janeway Institute Working Papers 2502, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camjip:2502
    Note: ip352
    as

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    File URL: https://www.janeway.econ.cam.ac.uk/working-paper-pdfs/jiwp2502.pdf
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    More about this item

    Keywords

    Decentralized General Equilibrium; Multiplex Networks; Distributed Optimization; Mesoeconomics; Social Welfare;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D30 - Microeconomics - - Distribution - - - General
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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