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Normal Approximation of the Disrtibution of the Equilibrium Price in Markets with Random Demand and Supply

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Author Info
Martin Smid (Institute of Information Theory & Automation of the Academy of Sciences of the Czech Republic)

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Abstract

In the paper, the asymptotic distribution of the equilibrium price in markets with the random demand and supply is described. Two special cases - the one with smooth demand and supply curves and the one with jump demand and supply curves - are studied. It is found that in both the cases the fluctuations of the price vanish at the rate O(n^{-1/2}) as the number of the agents n tends to infinity. Finally, a normal approximation of the distribution of the equilibrium price is suggested.

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File URL: http://129.3.20.41/eps/ge/papers/0411/0411001.pdf
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Publisher Info
Paper provided by EconWPA in its series GE, Growth, Math methods with number 0411001.

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Length: 13 pages
Date of creation: 28 Nov 2004
Date of revision:
Handle: RePEc:wpa:wuwpge:0411001

Note: Type of Document - pdf; pages: 13
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Web page: http://129.3.20.41

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Related research
Keywords: equilibrium price; random demand; random supply; asymptotic distribution; normal approximation;

Find related papers by JEL classification:
C6 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming
D5 - Microeconomics - - General Equilibrium and Disequilibrium
D9 - Microeconomics - - Intertemporal Choice and Growth

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This page was last updated on 2009-11-25.

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