Equilibrium in production chains with multiple upstream partners

DOI10.1016/J.JMATECO.2019.04.002MaRDI QIDQ2425185zbMATH OpenOpenAlexWikidataFDO

Authors Meng Yu, Jun-Nan Zhang

Publication date 26 June 2019

Published in Journal of Mathematical Economics (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/1908.08208

zbMATH Keywords

computational techniquesproduction networkequilibrium uniquenessfirm boundariesmonotone concave operator theory

Mathematics Subject Classification ID

Production theory, theory of the firm (91B38) Microeconomic theory (price theory and economic markets) (91B24) Monotone and positive operators on ordered Banach spaces or other ordered topological vector spaces (47H07)

Abstract: In this paper, we extend and improve the production chain model introduced by Kikuchi et al. (2018). Utilizing the theory of monotone concave operators, we prove the existence, uniqueness, and global stability of equilibrium price, hence improving their results on production networks with multiple upstream partners. We propose an algorithm for computing the equilibrium price function that is more than ten times faster than successive evaluations of the operator. The model is then generalized to a stochastic setting that offers richer implications for the distribution of firms in a production network.

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Cited in

(1)

• Coase meets Bellman: dynamic programming for production networks

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