Evolutionary Model of Non-Durable Markets
AbstractPresented is an evolutionary model of consumer non-durable markets, which is an extension of a previously published paper on consumer durables. The model suggests that the repurchase process is governed by preferential growth. Applying statistical methods it can be shown that in a competitive market the mean price declines according to an exponential law towards a natural price, while the corresponding price distribution is approximately given by a Laplace distribution for independent price decisions of the manufacturers. The sales of individual brands are determined by a replicator dynamics. As a consequence the size distribution of business units is a lognormal distribution, while the growth rates are also given by a Laplace distribution. Moreover products with a higher fitness replace those with a lower fitness according to a logistic law. Most remarkable is the prediction that the price distribution becomes unstable at market clearing, which is in striking difference to the Walrasian picture in standard microeconomics. The reason for this statement is that competition between products exists only if there is an excess supply, causing a decreasing mean price. When, for example by significant events, demand increases or is equal to supply, competition breaks down and the price exhibits a jump. When this supply shortage is accompanied with an arbitrage for traders, it may even evolve into a speculative bubble. Neglecting the impact of speculation here, the evolutionary model can be linked to a stochastic jump-diffusion model.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 33743.
Date of creation: 27 Sep 2011
Date of revision:
non-durables; evolutionary economics; economic growth; price distribution; Laplace distribution; replicator equation; firm growth; growth rate distribution; competition; jump-diffusion model;
Other versions of this item:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- C00 - Mathematical and Quantitative Methods - - General - - - General
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- A10 - General Economics and Teaching - - General Economics - - - General
- C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
- E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
- D00 - Microeconomics - - General - - - General
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kaldasch, Joachim, 2011.
"The Product Life Cycle of Durable Goods,"
50530, ZBW - German National Library of Economics.
- Giulio Bottazzi & Sandro Sapio & Angelo Secchi, 2004.
"Some Statistical Investigations on the Nature and Dynamics of Electricity Prices,"
LEM Papers Series
2004/13, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
- Bottazzi, G. & Sapio, S. & Secchi, A., 2005. "Some statistical investigations on the nature and dynamics of electricity prices," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 355(1), pages 54-61.
- Kaldasch, Joachim, 2011.
"Evolutionary model of an anonymous consumer durable market,"
Physica A: Statistical Mechanics and its Applications,
Elsevier, vol. 390(14), pages 2692-2715.
- Joachim Kaldasch, 2013. "Evolutionary Model of a Anonymous Consumer Durable Market," Papers 1306.3395, arXiv.org.
- Vasicek, Oldrich, 1977. "An equilibrium characterization of the term structure," Journal of Financial Economics, Elsevier, vol. 5(2), pages 177-188, November.
- Joachim Kaldasch, 2011.
"The Experience Curve and the Market Size of Competitive Consumer Durable Markets,"
59749, ZBW - German National Library of Economics.
- Kaldasch, Joachim, 2011. "The experience curve and the market size of competitive consumer durable markets," MPRA Paper 33370, University Library of Munich, Germany.
- Vasicek, Oldrich Alfonso, 1977. "Abstract: An Equilibrium Characterization of the Term Structure," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 12(04), pages 627-627, November.
- Joachim Kaldasch, 2012.
"Evolutionary Model of the Growth and Size of Firms,"
- Kaldasch, Joachim, 2012. "Evolutionary model of the growth and size of firms," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 391(14), pages 3751-3769.
- Kaldasch, Joachim, 2012.
"Evolutionary Model of the Personal Income Distribution,"
37865, University Library of Munich, Germany.
- Kaldasch, Joachim, 2012. "Evolutionary model of the personal income distribution," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 391(22), pages 5628-5642.
- Joachim Kaldasch, 2012. "Evolutionary Model of the Personal Income Distribution," Papers 1203.6507, arXiv.org.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.