IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2310.17423.html
   My bibliography  Save this paper

The Newtonian Mechanics of Demand

Author

Listed:
  • Max Mendel

Abstract

Economic engineering is a new field wherein economic systems are modelled in the same manner as traditional mechanical and electrical engineering systems. In this paper, we use Newton's theory of motion as the basis for the theory of demand; thereby establishing a theoretical foundation for economic engineering. We follow Newton's original development, as set forth in the Principia, to determine economic analogs to his three laws of motion. The pivotal result is an operational definition for an economic force, i.e. a want or a desire, in terms of a price adjustment. With this, we model the price effects of scarcity and trade friction in analogy with the models for the spring and damping force. In turn, we define economic benefits and surplus as analogous to the definitions of mechanical work and energy. These are then used to interpret the various types of economic equilibrium considered by economists from a mechanical perspective. The effectiveness of the analogy is illustrated by applying it to modelling the price and inventory dynamics of various economic agents -- including consumers, dealers, holders, spot and futures traders -- using linear-time invariant systems theory.

Suggested Citation

  • Max Mendel, 2023. "The Newtonian Mechanics of Demand," Papers 2310.17423, arXiv.org.
    • Handle: RePEc:arx:papers:2310.17423
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2310.17423
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Nicholas Kaldor, 1939. "Speculation and Economic Stability," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 7(1), pages 1-27.
    2. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, Decembrie.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Katsushi Nakajima, 2020. "Commodity Spot and Futures Prices Under Supply, Demand, and Financial Trading: Single Input–Output Model," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 27(1), pages 35-59, March.
    2. Wright, Austin L. & Sonin, Konstantin & Driscoll, Jesse & Wilson, Jarnickae, 2020. "Poverty and economic dislocation reduce compliance with COVID-19 shelter-in-place protocols," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 544-554.
    3. Janvier D. Nkurunziza, 2005. "Reputation and Credit without Collateral in Africa`s Formal Banking," Economics Series Working Papers WPS/2005-02, University of Oxford, Department of Economics.
    4. Vadim Borokhov, 2014. "On the properties of nodal price response matrix in electricity markets," Papers 1404.3678, arXiv.org, revised Jan 2015.
    5. Guillermo Llorente & Jiang Wang, 2020. "Trading and information in futures markets," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 40(8), pages 1231-1263, August.
    6. Gan, Li & Ju, Gaosheng & Zhu, Xi, 2015. "Nonparametric estimation of structural labor supply and exact welfare change under nonconvex piecewise-linear budget sets," Journal of Econometrics, Elsevier, vol. 188(2), pages 526-544.
    7. Peterson, Jeffrey M. & Boisvert, Richard N. & de Gorter, Harry, 1999. "Multifunctionality and Optimal Environmental Policies for Agriculture in an Open Economy," Working Papers 127701, Cornell University, Department of Applied Economics and Management.
    8. Aldasoro, Iñaki & Delli Gatti, Domenico & Faia, Ester, 2017. "Bank networks: Contagion, systemic risk and prudential policy," Journal of Economic Behavior & Organization, Elsevier, vol. 142(C), pages 164-188.
    9. Gatti, Nicolas & Cecil, Michael & Baylis, Kathy & Estes, Lyndon & Blekking, Jordan & Heckelei, Thomas & Vergopolan, Noemi & Evans, Tom, 2023. "Is closing the agricultural yield gap a “risky” endeavor?," Agricultural Systems, Elsevier, vol. 208(C).
    10. Guo, Kevin & Leung, Tim, 2017. "Understanding the non-convergence of agricultural futures via stochastic storage costs and timing options," Journal of Commodity Markets, Elsevier, vol. 6(C), pages 32-49.
    11. Chorvat, Terrence, 2006. "Taxing utility," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(1), pages 1-16, February.
    12. Delgado, Michael S. & Khanna, Neha, 2015. "Voluntary Pollution Abatement and Regulation," Agricultural and Resource Economics Review, Cambridge University Press, vol. 44(1), pages 1-20, April.
    13. Bhattacharya, D., 2018. "Income Effects and Rationalizability in Multinomial Choice Models," Cambridge Working Papers in Economics 1884, Faculty of Economics, University of Cambridge.
    14. List, Christian & Polak, Ben, 2010. "Introduction to judgment aggregation," Journal of Economic Theory, Elsevier, vol. 145(2), pages 441-466, March.
    15. Silvério, Renan & Szklo, Alexandre, 2012. "The effect of the financial sector on the evolution of oil prices: Analysis of the contribution of the futures market to the price discovery process in the WTI spot market," Energy Economics, Elsevier, vol. 34(6), pages 1799-1808.
    16. Franke, Jörg & Leininger, Wolfgang & Wasser, Cédric, 2018. "Optimal favoritism in all-pay auctions and lottery contests," European Economic Review, Elsevier, vol. 104(C), pages 22-37.
    17. Auster, Sarah & Kettering, Jeremy & Kochov, Asen, 2024. "Sequential trading with coarse contingencies," Journal of Economic Theory, Elsevier, vol. 220(C).
    18. Che-Yuan Liang, 2017. "Optimal inequality behind the veil of ignorance," Theory and Decision, Springer, vol. 83(3), pages 431-455, October.
    19. Shino, Junnosuke, 2013. "A positive theory of fixed-rate funds-supplying operations in an accommodative financial environment," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 595-610.
    20. Peysakhovich, Alexander & Plagborg-Møller, Mikkel, 2012. "A note on proper scoring rules and risk aversion," Economics Letters, Elsevier, vol. 117(1), pages 357-361.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2310.17423. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.