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A Practical Short-run Approach to Market Equilibrium

Author

Listed:
  • Anthony Horsley
  • Andrew J Wrobel
Abstract
The "short-run approach" calculates long-run producer optima and general equilibria bybuilding on short-run solutions to the producer's profit maximization problem and onprofit-based valuation of the fixed inputs. We outline this method and illustrate it on anexample of peak-load pricing.

Suggested Citation

  • Anthony Horsley & Andrew J Wrobel, 2005. "A Practical Short-run Approach to Market Equilibrium," STICERD - Theoretical Economics Paper Series 488, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    • Handle: RePEc:cep:stitep:488
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    File URL: https://sticerd.lse.ac.uk/dps/te/te488.pdf
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    References listed on IDEAS

    as
    1. Horsley, Anthony & Wrobel, Andrew J., 2002. "Efficiency rents of pumped-storage plants and their uses for operation and investment decisions," Journal of Economic Dynamics and Control, Elsevier, vol. 27(1), pages 109-142, November.
    2. Anthony Horsley & Andrew Wrobel, 2005. "Continuity of the equilibrium price density and its uses in peak-load pricing," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(4), pages 839-866, November.
    3. Anthony Horsley & Andrew J. Wrobel, 2002. "Boiteux's solution to the shifting-peak problem and the equilibrium price density in continuous time," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 20(3), pages 503-537.
    4. Horsley, Anthony & Wrobel, Andrew J., 2007. "Profit-maximizing operation and valuation of hydroelectric plant: A new solution to the Koopmans problem," Journal of Economic Dynamics and Control, Elsevier, vol. 31(3), pages 938-970, March.
    5. Anthony Horsley & Andrew J Wrobel, 2005. "The Wong-Viner Envelope Theorem for subdifferentiable functions," STICERD - Theoretical Economics Paper Series 489, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    general equilibrium; fixed-input valuation; nondifferentiable joint costs; Wong-Viner Envelope Theorem; peak-load pricing;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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