Consumer memory and price fluctuations in commodity markets: An integrodifferential model |
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| Authors: | Jacques Bélair Michael C Mackey |
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| Institution: | (1) Département de Mathématiques et de Statistique and Centre de Recherches Mathématiques, Université de Montréal, C.P. 6128, Succursale A, H3C 3J7 Montréal, Québec, Canada;(2) Department of Physiology, McGill University, 3655 Drummond Street, H3G 1Y6 Montreal, Quebec, Canada |
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| Abstract: | A model for the dynamics of price adjustment in a single commodity market is developed. Nonlinearities in both supply and demand functions are considered explicitly, as are delays due to production lags and storage policies, to yield a nonlinear integrodifferential equation. Conditions for the local stability of the equilibrium price are derived in terms of the elasticities of supply and demand, the supply and demand relaxation times, and the equilibrium production-storage delay. The destabilizing effect of consumer memory on the equilibrium price is analyzed, and the ensuing Hopf bifurcations are described. |
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| Keywords: | Commodity markets time delays stability Hopf bifurcation |
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