A spatial price network equilibrium paradox
摘要
Spatial price equilibrium models have had wide application in commodity trade in sectors such as agriculture and mineral and energy markets. Many of such models are network-based and their relevance is now heightened due to global issues such as increasing wars and crises as well as the negative impacts of climate change. Spatial price equilibrium problems are network equilibrium problems, which include traffic network equilibrium problems. We investigate whether an analogue to the Braess Paradox can occur in spatial price network equilibrium problems, which, unlike the classical Braess Paradox problem, have elastic demands, since consumers are sensitive to price. We construct a series of examples in which a spatial price network equilibrium paradox occurs in that, after the addition of a new transportation link, the demand price for the commodity rises; the supply price for the commodity decreases, and all transportation routes are now more costly. In the case of agricultural commodities such a paradox has negative implications for food security, since consumers receive a lower volume of the commodity but at a higher price. Farmers, on the other hand, also, suffer, since the supply price of the commodity decreases.