IDEAS home Printed from
   My bibliography  Save this article

General Economic Equilibrium as a Unifying Concept in Energy-Economic Modeling


  • John P. Weyant

    (Department of Operations Research, Stanford University, Stanford, California 94305)


In the pristine model of general economic equilibrium producers and consumers are assumed to take prices for their inputs and outputs as given. A market equilibrium solution is obtained when the prices of all products lead to equal amounts of supply and demand for each. The mathematical properties of this model provide a rich and powerful unifying foundation for much of modern microeconomic theory. However, in many practical applications it is difficult or impossible to develop the data, and formulate and solve the equations required to implement the model of general economic equilibrium in its most general form. In practice, generality of formulation is often sacrificed for ease of computation and interpretation. These tradeoffs allow the latest breakthroughs in optimization algorithms and computer technology to be applied in the analysis of important societal problems. A potential drawback associated with this otherwise desirable trend is that the analysis could become infatuated with the use of particular algorithms, and lose sight of the restrictive simplifying assumptions they imply. The present paper includes a comparison of the simplifying assumptions required in four of the most popular types of energy-economic models with respect to the model of general economic equilibrium. This comparison helps sharpen our appreciation for the tradeoffs between generalization of formulation and ease of computation and interpretation that are available. The concept of general economic equilibrium is employed to provide a common framework for four ostensibly different approaches to large-scale modeling: (1) variable-coefficient input-output theory, (2) process network methodology, (3) linear programming and (4) general nonlinear optimization. The similarities and the differences of the four approaches are isolated within this framework. This comparison makes both the absolute and the relative strengths and weaknesses of the models more transparent.

Suggested Citation

  • John P. Weyant, 1985. "General Economic Equilibrium as a Unifying Concept in Energy-Economic Modeling," Management Science, INFORMS, vol. 31(5), pages 548-563, May.
  • Handle: RePEc:inm:ormnsc:v:31:y:1985:i:5:p:548-563

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Shi, Xia & Lu, Yingzhong, 1990. "3.2. Multisectoral planning models," Energy, Elsevier, vol. 15(3), pages 325-339.
    2. Böhringer, Christoph & Rutherford, Thomos F., 2009. "Integrated assessment of energy policies: Decomposing top-down and bottom-up," Journal of Economic Dynamics and Control, Elsevier, vol. 33(9), pages 1648-1661, September.
    3. Capros, P. & Karadeloglou, P. & Mentzas, G. & Samouilidis, J.-E., 1990. "3.1. Short and medium-term modeling and problems of models linkage," Energy, Elsevier, vol. 15(3), pages 301-324.
    4. Gabriel, Steven A. & Vikas, Shree & Ribar, David M., 2000. "Measuring the influence of Canadian carbon stabilization programs on natural gas exports to the United States via a 'bottom-up' intertemporal spatial price equilibrium model," Energy Economics, Elsevier, vol. 22(5), pages 497-525, October.
    5. Bohringer, Christoph, 1998. "The synthesis of bottom-up and top-down in energy policy modeling," Energy Economics, Elsevier, vol. 20(3), pages 233-248, June.
    6. Wietschel, M. & Fichtner, W. & Rentz, O., 1997. "Integration of price-depending demand reactions in an optimising energy emission model for the development of CO2-mitigation strategies," European Journal of Operational Research, Elsevier, vol. 102(3), pages 432-444, November.
    7. Ponce, Roberto & Parrado, Ramiro & Stehr, Alejandra & Bosello, Francesco, 2016. "Climate Change, Water Scarcity in Agriculture and the Economy-Wide Impacts in a CGE Framework," EIA: Climate Change: Economic Impacts and Adaptation 251813, Fondazione Eni Enrico Mattei (FEEM).

    More about this item


    energy; economics;


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:31:y:1985:i:5:p:548-563. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.