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Economic Foundations of Symmetric Programming

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This book formulates and discusses models of producers’ economic behavior using the framework of mathematical programming. Furthermore, it introduces the Symmetry Principle in economics and demonstrates its analytical power in dealing with problems hitherto considered either difficult or intractable. It assumes that its readers have a beginner’s knowledge of calculus and linear algebra and that, at least, they have taken an intermediate course in microeconomics.

The treatment of economic behavior expounded in this book acquires an operational character that, in general, is not present in a theory course. In a microeconomics course, for example – even at the graduate level – the treatment of a monopolist’s behavior considers only one commodity. Often, however, a monopolist owns demand functions for three or more commodities (think of Microsoft) and her firm’s equilibrium requires a careful analysis, especially in the case of perfectly discriminating behavior. Another example regards the analysis of risk and uncertainty in the presence of nonzero covariances between risky output market prices and input supplies. These and many other “realistic” economic scenarios require the introduction of a structure called the Equilibrium Problem. Although this specification is the logical representation of quantity and price equilibrium conditions for any commodity, economic theory courses privilege statements of economic models that involve a dual pair of maximizing and minimizing objective functions. This book makes it clear that these optimizing structures are only special cases of the class of Equilibrium Problems and that, often, they impose unnecessary restrictions on the specification of economic models.
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