Measuring the effects of price controls using mixed complementarity models
| Autor: | Frederic H. Murphy, Yves Smeers, Axel Pierru |
|---|---|
| Přispěvatelé: | UCL - SSH/LIDAM/CORE - Center for operations research and econometrics |
| Rok vydání: | 2019 |
| Předmět: |
TheoryofComputation_MISCELLANEOUS
Information Systems and Management General Computer Science Disequilibrium 0211 other engineering and technologies 02 engineering and technology price controls Management Science and Operations Research Industrial and Manufacturing Engineering Microeconomics subsidies Deregulation mixed complementary problem 0502 economics and business Economics medicine rationing Emerging markets 050210 logistics & transportation 021103 operations research 05 social sciences Rationing Subsidy OR in energy Complementarity (physics) Modeling and Simulation medicine.symptom Mixed complementarity problem |
| Zdroj: | European Journal of Operational Research, Vol. 275, no. 2, p. 666-676 (2019) |
| ISSN: | 0377-2217 |
| Popis: | Government involvement in managing domestic prices of energy and other commodities is a major issue in emerging economies. We examine one aspect of the problem, price controls, when governments set or cap prices. We show how a Mixed Complementarity Problem (MCP) formulation can be used to model and assess the impacts of price controls in multi-sector economic-equilibrium models. Both the gains from deregulation and the consequences of imposing new or altering existing regulations can thus be measured. We present three distinct models that capture different price-control situations: firms have to meet demand and receive an implicit subsidy, demand rationing occurs due to an associated price control constraint, and subsidies limit demand rationing. We present an approach to measuring the effects on the equilibrium in the first case and the levels of disequilibrium induced by price controls in the other cases. We also show how to determine the most efficient allocation program when a government engages in rationing. We illustrate the cases described by these models using markets that have or had price controls. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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