Publications and Research
Document Type
Article
Publication Date
5-27-2013
Abstract
The classical cobweb theorem is extended to include production lags and price forecasts. Price forecasting based on a longer period has a stabilizing effect on prices. Longer production lags do not necessarily lead to unstable prices; very long lags lead to cycles of constant amplitude. The classical cobweb requires elasticity of demand to be greater than that of supply; this is not necessarily the case in a more general setting. Random shocks are also considered.
Comments
This work was originally published in Economics: The Open-Access, Open-Assessment E-Journal, available at http://dx.doi.org/10.5018/economics-ejournal.ja.2013-23