A cobweb model with local externalities
This paper considers an extension of the standard cobweb model in a market with local externalities. In contrast with the standard cobweb model, firms must forecast both prices and local quantities; we develop new constructive stability and existence conditions for equilibria with positive outputs. We find evidence of clusters of firms whose output behavior is correlated as equilibrium is reached. We also show that an appropriately defined 'representative agent model' with a global externality exhibits the same mean or second-order properties of aggregate output as the more complex model with local externalities.
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
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.:
- Diks, C.G.H. & Hommes, C.H. & Panchenko, V. & Weide, R. van der, 2006.
"E&F Chaos: a user friendly software package for nonlinear economic dynamics,"
CeNDEF Working Papers
06-15, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
- Cees Diks & Cars Hommes & Valentyn Panchenko & Roy Weide, 2008. "E&F Chaos: A User Friendly Software Package for Nonlinear Economic Dynamics," Computational Economics, Society for Computational Economics, vol. 32(1), pages 221-244, September.
- William A. Brock & Cars H. Hommes, 1997.
"A Rational Route to Randomness,"
Econometric Society, vol. 65(5), pages 1059-1096, September.
- Durlauf, Steven N, 1996.
" A Theory of Persistent Income Inequality,"
Journal of Economic Growth,
Springer, vol. 1(1), pages 75-93, March.
- Barsky, Robert B & Miron, Jeffrey A, 1989.
"The Seasonal Cycle and the Business Cycle,"
Journal of Political Economy,
University of Chicago Press, vol. 97(3), pages 503-34, June.
- Follmer, Hans, 1974. "Random economies with many interacting agents," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 51-62, March.
- William A. Brock, 1993.
"Pathways to randomness in the economy: Emergent nonlinearity and chaos in economics and finance,"
El Colegio de México, Centro de Estudios Económicos, vol. 8(1), pages 3-55.
- W. A. Brock, 1993. "Pathways to Randomness in the Economy: Emergent Nonlinearity and Chaos in Economics and Finance," Working Papers 93-02-006, Santa Fe Institute.
- Haltiwanger, John & Waldman, Michael, 1985.
"Rational Expectations and the Limits of Rationality: An Analysis of Heterogeneity,"
American Economic Review,
American Economic Association, vol. 75(3), pages 326-40, June.
- John Haltiwanger & Michael Waldman, 1983. "Rational Expectations and the Limits of Rationality: An Analysis of Heterogeneity," UCLA Economics Working Papers 303, UCLA Department of Economics.
- Ulrich Horst, 2005.
"Financial price fluctuations in a stock market model with many interacting agents,"
Springer, vol. 25(4), pages 917-932, 06.
- Horst, Ulrich, 2001. "Financial price fluctuations in a stock market model with many interacting agents," SFB 373 Discussion Papers 2001,36, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Forni, Mario & Lippi, Marco, 1997. "Aggregation and the Microfoundations of Dynamic Macroeconomics," OUP Catalogue, Oxford University Press, number 9780198288008, March.
- Arifovic, Jasmina, 1994. "Genetic algorithm learning and the cobweb model," Journal of Economic Dynamics and Control, Elsevier, vol. 18(1), pages 3-28, January.
- U. Horst & Jose A. Scheinkman, 2010.
"Equilibria in Systems of Social Interactions,"
Levine's Working Paper Archive
506439000000000119, David K. Levine.
- Steven N. Durlauf, 1991.
"Nonergodic Economic Growth,"
NBER Working Papers
3719, National Bureau of Economic Research, Inc.
- Artstein, Zvi, 1983. "Irregular cobweb dynamics," Economics Letters, Elsevier, vol. 11(1-2), pages 15-17.
- repec:cup:cbooks:9780521314985 is not listed on IDEAS
- Chiarella, Carl, 1988. "The cobweb model: Its instability and the onset of chaos," Economic Modelling, Elsevier, vol. 5(4), pages 377-384, October.
- Hommes, Cars H., 1994. "Dynamics of the cobweb model with adaptive expectations and nonlinear supply and demand," Journal of Economic Behavior & Organization, Elsevier, vol. 24(3), pages 315-335, August.
- Glaeser, Edward L & Sacerdote, Bruce & Scheinkman, Jose A, 1996.
"Crime and Social Interactions,"
The Quarterly Journal of Economics,
MIT Press, vol. 111(2), pages 507-48, May.
- Edward L. Glaeser & Bruce Sacerdote & Jose A. Scheinkman, 1995. "Crime and Social Interactions," NBER Working Papers 5026, National Bureau of Economic Research, Inc.
- Edward E. Glaeser & Bruce Sacerdote & Jose A. Scheinkman, 1995. "Crime and Social Interactions," Harvard Institute of Economic Research Working Papers 1738, Harvard - Institute of Economic Research.
- Follmer, Hans & Horst, Ulrich & Kirman, Alan, 2005. "Equilibria in financial markets with heterogeneous agents: a probabilistic perspective," Journal of Mathematical Economics, Elsevier, vol. 41(1-2), pages 123-155, February.
- Caballero, R.J. & Lyons, R.K., 1991.
"External Effects in U.S. Procyclical Productivity,"
91-19, Columbia - Graduate School of Business.
- Jensen, Roderick V. & Urban, Robin, 1984. "Chaotic price behavior in a non-linear cobweb model," Economics Letters, Elsevier, vol. 15(3-4), pages 235-240.
- Caballero, Ricardo J. & Lyons, Richard K., 1990.
"Internal versus external economies in European industry,"
European Economic Review,
Elsevier, vol. 34(4), pages 805-826, June.
- Caballero, R.J. & Lyons, R.K., 1989. "Internal Versus External Economies In European Industry," Discussion Papers 1989_10, Columbia University, Department of Economics.
- Hart, Oliver, 1982. "A Model of Imperfect Competition with Keynesian Features," The Quarterly Journal of Economics, MIT Press, vol. 97(1), pages 109-38, February.
- Masanao Aoki, 1995. "Economic Fluctuations With Interactive Agents: Dynamic And Stochastic Externalities," The Japanese Economic Review, Japanese Economic Association, vol. 46(2), pages 148-165, 06.
- Brock,W.A. & Durlauf,S.N., 2000.
"Discrete choice with social interactions,"
7, Wisconsin Madison - Social Systems.
- P. Diamond, 1980.
"Aggregate Demand Management in Search Equilibrium,"
268, Massachusetts Institute of Technology (MIT), Department of Economics.
- Lucas, Robert Jr., 1972. "Expectations and the neutrality of money," Journal of Economic Theory, Elsevier, vol. 4(2), pages 103-124, April.
- Alan P. Kirman, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-136, Spring.
- Binder, Michael & Pesaran, M. Hashem, 2001. "Life-cycle consumption under social interactions," Journal of Economic Dynamics and Control, Elsevier, vol. 25(1-2), pages 35-83, January.
- Hommes, Cars H., 1998. "On the consistency of backward-looking expectations: The case of the cobweb," Journal of Economic Behavior & Organization, Elsevier, vol. 33(3-4), pages 333-362, January.
- Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
- Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
When requesting a correction, please mention this item's handle: RePEc:eee:dyncon:v:32:y:2008:i:3:p:821-847. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.