GEORGE WASHINGTON UNIV WASHINGTON D C INST FOR MANAGEMENT SCIENCE AND ENGINEERING
The problem of determining a vector that places a system in a state of equilibrium is studied with the aid of mathematical programming. The approach derives from the logical equivalence between the general equilibrium problem and the complementarity problem. When the excess demand function gx meets certain separability conditions, equilibrium solutions are obtained by using an established branch and bound algorithm. Because the best upper bound is known at the outset, an independent check for convergence can be made at each iteration of the algorithm, thereby greatly increasing its efficiency. A number of examples drawn from economic and network theory are presented in order to demonstrate the computational aspects of the approach. The results appear promising for a wide range of problem sizes and types, with solutions occurring in a relatively small number of iterations.