Financial networks with intermediation and transportation network equilibria: A supernetwork equivalence and reinterpretation of the equilibrium conditions with computations

Zugang Liu, Anna Nagurney

Research output: Contribution to journalArticlepeer-review

19 Scopus citations

Abstract

In this paper, we consider two distinct classes of network problems - financial networks with intermediation and with electronic transactions and transportation network equilibrium problems, which have been modeled and studied independently. We then prove that the former problem can be reformulated as the latter problem through an appropriately constructed abstract network i.e., a supernetwork. The established equivalence allows one to then transfer the methodological tools, in particular, algorithms, that have been developed for transportation network equilibria to the financial network domain. In addition, this connection provides us with a novel interpretation of the financial network equilibrium conditions in terms of paths and path flows and a direct existence result. We further show how the theoretical results obtained in this paper can be exploited computationally through several numerical examples.

Original languageEnglish (US)
Pages (from-to)243-281
Number of pages39
JournalComputational Management Science
Volume4
Issue number3
DOIs
StatePublished - Jul 2007

All Science Journal Classification (ASJC) codes

  • Management Information Systems
  • Information Systems

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