Article ID: MTJPAM-D-20-00051

Title: Spatial Price Equilibrium, Perishable Products, and Trade Policies in the Covid-19 Pandemic


Montes Taurus J. Pure Appl. Math. / ISSN: 2687-4814

Article ID: MTJPAM-D-20-00051; Volume 4 / Issue 3 / Year 2022 (Special Issue), Pages 9-24

Document Type: Research Paper

Author(s): Anna Nagurney a

aDepartment of Operations and Information Managemen Isenberg School of Management University of Massachusetts, Amherst, Massachusetts 01003 USA

Received: 21 December 2020, Accepted: 31 January 2021, Published: 8 May 2021.

Corresponding Author: Anna Nagurney (Email address: nagurney@isenberg.umass.edu)

Full Text: PDF

Abstract

The Covid-19 pandemic is a major healthcare disaster of global proportions, and has resulted in immense suffering and loss of life, along with disruptions in economic and social activities. Governments of many nations in the midst of the pandemic have been instituting a variety of trade policies, including tariffs and quotas, on products deemed important to their citizenry. Many of the products, such as food items, medicines, and even PPEs are perishable products. In this paper, we construct the first multiproduct spatial price equilibrium model, in both static and dynamic versions, that captures product perishability, and trade policies in the form of tariffs and quotas. The static model is formulated as a variational inequality problem and the dynamics studied using a projected dynamical system. Theoretical results are presented along with a series of increasingly complex numerical examples, the solutions to which are computed using a proposed algorithm, for which convergence results are also given. The results illustrate the importance of having a rigorous theoretical and algorithmic framework to assess the impacts of trade policies, before their implementation.

Keywords: Spatial price equilibrium, Perishable products, Trade policies, Covid-19 pandemic, Variational inequalities, Projected dynamical systems

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