The Economic Foundation of Generalized Equilibrium Modeling

In 1978 the author and his colleagues built the LEAP model and the Generalized Equilibrium Modeling System (GEMS). Often confused with the SRI-Gulf model, the GEMS/LEAP technique draws from the network modeling philosophy of the SRI-Gulf model. However, the GEMS/LEAP approach is significantly more advanced in its representation of producer and consumer behavior, its representation of market-dynamics, its solution algorithm, and its relationship to accepted economic and mathematical programming theory. This paper describes the methodological foundations of the many GEMS and LEAP models in existence. It also gives illustrative results.