Solving Over-production and Supply-guarantee Problems in Economic Equilibria

Bing sheng He, Wei Xu, Hai Yang, Xiaoming YUAN*

*Corresponding author for this work

Research output: Contribution to journalJournal articlepeer-review

3 Citations (Scopus)


The classical Spatial Price Equilibrium of economic markets may result in over-production at supply markets and under-supply at demand markets. This paper considers the policy instruments of levying taxes at supply markets to avoid over-production and granting subsidy for traders to guarantee supply at demand markets. The decision process of determining appropriate rates of tax and subsidy is characterized by an implicit complementarity problem. Consequently, a direct type algorithm is applied to solve the complementarity model. Preliminary numerical results are also reported.

Original languageEnglish
Pages (from-to)127-138
Number of pages12
JournalNetworks and Spatial Economics
Issue number1
Publication statusPublished - Mar 2011

Scopus Subject Areas

  • Software
  • Computer Networks and Communications
  • Artificial Intelligence

User-Defined Keywords

  • Direct method
  • Implicit complementarity problem
  • Over-production
  • Spatial price equilibrium
  • Supply-guarantee


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