Journal
NETWORKS & SPATIAL ECONOMICS
Volume 11, Issue 1, Pages 127-138Publisher
SPRINGER
DOI: 10.1007/s11067-008-9095-2
Keywords
Spatial price equilibrium; Over-production; Supply-guarantee; Implicit complementarity problem; Direct method
Funding
- NSFC [10571083, 10701055, 70732003]
- Jiangsu NSF [2008255]
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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.
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