THE MICROECONOMIC EQUILIBRIUM OPTIMIZER (MEO)

This document presents the Microeconomic Equilibrium Optimizer (MEO), a deterministic, equilibrium-based framework for multi-channel resource allocation grounded in microeconomic marginal analysis. Rather than maximizing an explicitly defined global objective function, MEO reallocates resources until marginal profit equalizes across channels, achieving internal equilibrium through endogenous comparative signals. For each channel k:PUₖ = MUₖ / UCₖ Marginal profit is defined as:MPₖ = MUₖ − UCₖ − OCₖ Allocations update according to:Qₖ(new) = Qₖ + α · MPₖ Under standard regularity conditions (continuity, strictly positive unit cost, and diminishing marginal utility), MEO converges to a locally stable equilibrium characterized by marginal-profit equalization. In concave systems, this equilibrium is consistent with first-order optimality conditions of constrained optimization. In non-convex systems, convergence is local rather than globally guaranteed. MEO requires only marginal value and cost functions; it does not require explicit scalar objective construction, stochastic exploration, or externally engineered constraint matrices. Substitution structure functions as an endogenous constraint system. The specification includes formal definitions, stability analysis, method comparisons, explicit limitations, and a fully worked three-product manufacturing example.