Existence and computation of short-run equilibria in economic geography

The new economic geography literature provides a general equilibrium framework that explains the emergence of economic agglomerations as a trade-off between increasing returns at the firm level and transportation costs related to the shipment of goods. The existence and uniqueness of short–run equilibria of this model has been shown for the case of two regions. The proposed approach employs the differential evolution algorithm to obtain estimates of the Lipschitz constant and the infinity norm of the function along the boundary and utilizes these values to investigate the existence of solutions of a function, and the computational burden of computing the topological degree of this function. This approach is employed to investigate the existence of short–run equilibria for more than two regions using fixed point and topological degree theory, as well as, the differential evolution algorithm. Irrespective of parameter settings the criteria from topological degree theory sugges...

• Type: Journal
• Year: 2007
• Where: AMC
• Authors: Nicos G. Pavlidis, Michael N. Vrahatis, P. Mossay
• Keywords: AMC 2007, Differential Evolution Algorithm, Topological Degree, Topological Degree Theory