Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/56489 
Year of Publication: 
2012
Series/Report no.: 
Economics Discussion Papers No. 2012-17
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
Abstract: 
The classical cobweb theorem is extended to include production lags and price forecasts. Price forecasting based on a longer period has a stabilizing effect on prices. Longer production lags do not necessarily lead to unstable prices; very long lags lead to cycles of constant amplitude. The classical cobweb requires elasticity of demand to be greater than that of supply; this is not necessarily the case in a more general setting, price forecasting has a stabilizing effect. Random shocks are also considered.
Subjects: 
Cobweb theorem
production lags
stable markets
price fluctuations
JEL: 
C02
C62
C65
D58
E32
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Working Paper

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