Spatial market equilibria with flow-dependent supply and demand: The single commodity case

Existence and uniqueness of spatial price equilibria are analyzed for a single commodity market network in which supply and demand levels are allowed to depend on commodity flows as well as market prices. This framework makes possible the explicit incorporation of flow-dependent shipment costs into market supply and demand functions. Moreover, since many quantity signals are also expressible as flow-dependent variables, it is possible to incorporate a number of recent models of supply and demand behavior which allow for quantity signals as well as price signals. In this context, the main result of the paper is to establish the existence of spatial price equilibria for such market networks under quite general conditions. In addition, certain uniqueness results are established for the case of arc-generated networks.