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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," Cambridge Working Papers in Economics 2508, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2508
    Note: ip352
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    References listed on IDEAS

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    1. Daron Acemoglu & Pablo D. Azar, 2020. "Endogenous Production Networks," Econometrica, Econometric Society, vol. 88(1), pages 33-82, January.
    2. Paul L. Joskow, 2008. "Lessons Learned From Electricity Market Liberalization," The Energy Journal, , vol. 29(2_suppl), pages 9-42, December.
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    Keywords

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    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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