Production delays, supply distortions and endogenous price dynamics

Arbeitspapier

It takes time to produce commodities, and different production technologies may take different lengths of time. Suppose that firms may switch between different production technologies that take different lengths of time. A natural implication of such a scenario is that not all firms would then offer their commodities in every period, i.e. firms' total supply schedule would become a time-varying quantity. Based on a behavioral cobweb framework, we analytically demonstrate that commodity markets become unstable when firms switch too rapidly between production technologies that take different lengths of time. In particular, we observe that supply distortions lead to endogenous commodity price dynamics due to a mismatch between supply and demand.

Object Details

• ISBN: 978-3-949224-03-4
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: BERG Working Paper Series ; No. 182

Classification and Topics

• Classification: Wirtschaft ; Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity ; Business Fluctuations; Cycles ; Agriculture: Aggregate Supply and Demand Analysis; Prices
• Subject: Cobweb models ; production delays ; endogenous price dynamics ; bounded rationality and learning ; nonlinear maps ; stability and bifurcation analysis

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dieci, Roberto ; Mignot, Sarah ; Schmitt, Noemi ; Westerhoff, Frank H.
• Event: Veröffentlichung
• (who): Bamberg University, Bamberg Economic Research Group (BERG)
• (where): Bamberg
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/264885
• Last update: 10.03.2025, 11:41 AM CET