A sensitivity analysis of the linear complementarity programming model: Appalachian steam coal and the natural gas market

There have been extensive attempts in recent years to perform spatial equilibrium analysis of commodity markets, particularly that of energy. Most of these attempts have been based on linear programming transportation models, and more recently quadratic programming models. Unfortunately, neither of these modelling approaches can deal with the case of multi-commodity analysis with non-symmetric regression coefficients. In this paper, we overcome this problem by employing the linear complementarity programming model. In addition, we show how the model can be applied to coal and gas energy flows within a single region. Future potential applications of the model are also implied.