Friday, 15:15 - 15:40 h, Room: MA 005


W. Ross Morrow
Computing equilibria in regulated differentiated product market models

Coauthors: Joshua Mineroff, Kate S. Whitefoot


Game theoretic models are applied to study markets for differentiated product such as personal vehicles, consumer electronics, and various food products and services. One of the most important applications concerns the impact of regulatory policy on market behavior. Practical insights from such models rests on the ability to compute equilibria, which in turn requires solving potentially large Mixed Complementarity Problems (MCPs). This seminar discusses several advances in the formulation of such models and the subsequent computation of equilibrium when firms face regulations with non-smooth regulatory costs. Equilibrium prices are modeled with MCPs, while product design decisions are modeled with a Stackelberg-type two-stage game that results in an MPEC/EPEC. One unique feature of these applications is a lack of regularity as prices increase without bound, a consequence of the type of demand model used. We solve this issue by identifying appropriately coercive problem formulations. Computational results obtained with state-of-the-art NLP software (PATH, KNITRO, SNOPT) are provided for fuel economy regulations in the U.S.


Talk 1 of the invited session Fri.3.MA 005
"Learning and computation for game-theoretic problems" [...]
Cluster 8
"Game theory" [...]


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