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

  • Martin Smid

    (Institute of Information Theory & Automation of the Academy of Sciences of the Czech Republic)

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://econwpa.repec.org/eps/ge/papers/0411/0411001.pdf
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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
Contact details of provider: Web page: http://econwpa.repec.org

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