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Dynamics of a durable commodity market involving trade at disequilibrium
Umeå University, Faculty of Social Sciences, Centre for Regional Science (CERUM).
2018 (English)In: Communications in nonlinear science & numerical simulation, ISSN 1007-5704, E-ISSN 1878-7274, Vol. 58, p. 2-14Article in journal (Refereed) Published
Abstract [en]

The present work considers a simple model of a durable commodity market involving two agents who trade stocks of two different types. Stock commodities, in contrast to flow commodities, remain on the market from period to period and, consequently, there is neither unique demand function nor unique supply function exists. We also set up exact conditions for trade at disequilibrium, the issue being usually neglected, though a fact of reality. The induced iterative system has infinite number of fixed points and path dependent dynamics. We show that a typical orbit is either attracted to one of the fixed points or eventually sticks at a no-trade point. For the latter the stock distribution always remains the same while the price displays periodic or chaotic oscillations. (C) 2017 Elsevier B.V. All rights reserved.

Place, publisher, year, edition, pages
ELSEVIER SCIENCE BV , 2018. Vol. 58, p. 2-14
Keywords [en]
Durable commodity markets, Disequilibrium trade, Path dependence, Piecewise smooth systems
National Category
Economics
Identifiers
URN: urn:nbn:se:umu:diva-150719DOI: 10.1016/j.cnsns.2017.08.003ISI: 000416034300002Scopus ID: 2-s2.0-85028330597OAI: oai:DiVA.org:umu-150719DiVA, id: diva2:1239249
Conference
International Workshops on Dynamic Models in Economics and Finance (MDEF), JUN 23-25, 2016, Urbino, ITALY
Available from: 2018-08-16 Created: 2018-08-16 Last updated: 2018-08-16Bibliographically approved

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Puu, Tönu

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  • nn-NB
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