Questions about FTA Models

Attached is a simple price elasticities model of world trade that functions reasonably well in GAMS so long as the model's fta-parameter is set equal to 0. If fta=1, the model attempts to solve for world trade and prices in the presence of a free trade area formed by a subset of k countries. The fta variant of the model is causing me problems, I presume because it is nonlinear and discontinuous.

I have tried toying with a dnlp version of the model, but the attached 'square' mcp version seems to yield the same (unsatisfactory) results. Within the logic of the model, if net regional trade in a commodity is negative, then the regional to world price ratio should be greater than unity. However, the model seems to follow this logic only on the first iteration. After the first iteration, the model finds (declares) a soln that does not observe the expected relationship between net regional trade and relative regional to world prices.

Is there some way to dependably enforce this condition on the model soln, within the framework of the present model? If not, could you kindly outline how I might try to setup the model more appropriately in Gams to obtain a proper soln.

Sorry, but the problems you are encountering are because of problems in the model formulation. You are attempting to solve a complementarity problem through a roughly implemnted enumeration method which is unlikely to work reliably.

Here is a fairly quick writeup which introduces the model formulation.
Here is an implementation of the simple model which is formulated as a square system of equations. To run this model you will need in addition a copy of the data file in gdx or xls format.
Here is an implementation of the FTA model in complementarity format. If you wish to return results in Excel format, you may also wish to take a copy of results.xls
Here is an revised implementation of the FTA model which corrects some reporting problems and provides a loose constraint preventing cross-hauling on intra-FTA trade flows.