Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/249150
Year of Publication: 
2021
Series/Report no.: 
BERG Working Paper Series No. 174
Publisher: 
Bamberg University, Bamberg Economic Research Group (BERG), Bamberg
Abstract: 
We develop a cobweb model in which firms, facing a two-period production delay, have access to a flexible (costly) and an inflexible (cheap) production technology. Moreover, firms select between production technologies depending on theirevolutionary fitness, measured in terms of past realized profits. The dynamics of our cobweb model is driven by a four-dimensional nonlinear map. We analytically show that its unique steady state may become unstable due to a Neimark-Sacker bifurcation, a scenario that gives rise to cyclical price dynamics, as observed in actual commodity markets. Simulations furthermore reveal that our cobweb model may also produce chaotic motion.
Subjects: 
Cobweb models
production technology
cyclical price dynamics
bounded rationality and learning
stability and bifurcation analysis
chaos
JEL: 
D24
E32
Q11
ISBN: 
978-3-943153-95-8
Document Type: 
Working Paper

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