Network Economics: A Variational Inequality Approach

Computational economics has been at the forefront in stimulating the de- velopment of mathematical methodologies for the analysis and solution of complex, large-scale problems. The past decade, in particular, has witnessed a dramatic growth of interest in this area. Supported by the increasing avail- ability of data and advances in computer architectures, the scale and scope of problems that can now be handled are unveiling new horizons in both theoretical modeling and policy analysis. Accompanying the activity in computational economics is a need for the unification, documentation, and presentation of fundamental methodologies for use by both researchers and practitioners. This volume aims to make a contribution in this direction. The focus of this book is on network economics. Physical networks are pervasive in todays society, be they in the form of transportation networks, telecommunication networks, energy pipelines, electric power networks, etc. Mathematical networks, on the other hand, may be used to represent not only physical networks but also interactions among economic agents. In many applications, the network representation of an economic equilibrium problem may be abstract in that the nodes of the network need not corre- spond to locations in space and the links of the network to trade or travel routes.