일상, 생각
Cobweb Model
morphix
2007. 3. 29. 11:19
Situation
Think about the fluctuations of the price of a commodity. First year, the price is quite low, next year quite high, and the next year becomes quite low again without being converged. Agricutural products can be good examples. Especially in Korea, all the farmers used to be got involved to a few specific products, and after the harvest, the price went down 'cause of a lot of supply.
Causes
The main reason of such a symptom is the time lag between the supply decision and the actual supplyment. At the time of deciding the supplyment, the product might be prospective since its low supplyment, however, too many participants went through the severe competition.
Model
The model is like this
S(t+1) = a + b * P(t)
D(t+1) = c + d * P(t+1)
where
S(t) is the amount of supply at time t,
P(t) is the price at time t,
D(t) is the amount of demand at time t,
a, b, c, d are constants parameters.
If the constant parameters are approriately valued, you can observe the flucturaing movement of the price.
Further readings
http://en.wikipedia.org/wiki/Cobweb_model
Think about the fluctuations of the price of a commodity. First year, the price is quite low, next year quite high, and the next year becomes quite low again without being converged. Agricutural products can be good examples. Especially in Korea, all the farmers used to be got involved to a few specific products, and after the harvest, the price went down 'cause of a lot of supply.
Causes
The main reason of such a symptom is the time lag between the supply decision and the actual supplyment. At the time of deciding the supplyment, the product might be prospective since its low supplyment, however, too many participants went through the severe competition.
Model
The model is like this
S(t+1) = a + b * P(t)
D(t+1) = c + d * P(t+1)
where
S(t) is the amount of supply at time t,
P(t) is the price at time t,
D(t) is the amount of demand at time t,
a, b, c, d are constants parameters.
If the constant parameters are approriately valued, you can observe the flucturaing movement of the price.
Further readings
http://en.wikipedia.org/wiki/Cobweb_model