A DYNAMIC DISEQUILIBRIUM INTERREGIONAL COMMODITY FLOW MODEL

We are concerned in this paper with creating a dynamic description of interregional commodity movements which has steady states consistent w ith the traditional Samuelson-Takayama-Judge (STJ) static spatial pric e equilibrium model. This is accomplished by introducing a disequilibr ium adjustment mechanism which differs from that of other network spat ial price tatonnement models in that prices and interregional Bows fol low distinct signals, and constraints ensuring balanced trade flows ar e not enforced prior to attaining an equilibrium. The disequilibria ar ising from our relaxation of the Bow balance constraints are seen to p rovide a foundation for describing failures of spatial markets to clea r. Also notable among the features of our model is its treatment of a general network topology and non-separable cost, supply and demand fun ctions. We show through numerical experiments that the proposed adjust ment process is seen to hold promise as means of calculating static sp atial price equilibria. Furthermore, we discuss the circumstances unde r which disequilibrium states visited by the adjustment process descri be actual time-varying commodity Bows and prices, allowing the model t o be used for predictive dynamic interregional freight modeling. (C) 1 998 Elsevier Science Ltd. All rights reserved.