Using a Joint-Input, Multi-Product Formulation to Improve Spatial Price Equilibrium Models
Bishop, Phillip M.; Pratt, James E.; Novakovic, Andrew M.
Mathematical programming models, as typically formulated for international trade applications, may contain certain implied restrictions which lead to solutions which can be shown to be technically infeasible, or if feasible, then not actually an equilibrium. An alternative formulation is presented which allows joint-inputs and multi-products, with pure transshipment and product substitution forms of arbitrage.
Charles H. Dyson School of Applied Economics and Management, Cornell University