A Technique for the Solution of Spatial Equilibrium Models

This paper describes a new approach to the solution of models of spatial price equilibrium. This approach makes use of a type of algorithm which has been used to compute Kakutani fixed points and non-spatial economic equilibria. The algorithm is very different from most employed in the past. It does not solve the equilibrium problem by maximizing anything, and it is capable of handling demand and supply relationships which are upper semi-continuous correspondences. Two particular types of spatial equilibrium model are considered in detail. These are generalizations of the transportation problem and of Von Thunen's land use model. Solutions to a concrete example of each type of problem are presented.