Projection an Duality Techniques in Economic Equilibrium Models

A decomposition scheme especially suitable for solving sectorial economic equilibrium models is presented. The approach can be classified as "projection/feasible directions," but unlike the adaptive demand procedures, we project onto the space of production (or distribution) variables as opposed to projecting the whole problem onto the space of demand variables. The advantage is to work implicitly with a differentiable master program; yet the subprograms are easily solved by duality techniques. Some computational experiments related to two typical situations are also presented: 1) a dynamic and nonconvex case as it arises with one producer (a public power utility) in a situation of marginal cost pricing and 2) a spatial price equilibrium model representing the competitive behavior of many producers and distribution agents.