A cobweb model with local externalities

Autor: J. Michael Orszag, M. Ali Choudhary
Rok vydání: 2008
Předmět:
Zdroj: Journal of Economic Dynamics and Control. 32:821-847
ISSN: 0165-1889
DOI: 10.1016/j.jedc.2007.04.001
Popis: This paper considers an extension of the standard cobweb model in a market with local externalities. In contrast with the standard cobweb model, firms must forecast both prices and local quantities; we develop new constructive stability and existence conditions for equilibria with positive outputs. We find evidence of clusters of firms whose output behavior is correlated as equilibrium is reached. We also show that an appropriately defined ‘representative agent model’ with a global externality exhibits the same mean or second-order properties of aggregate output as the more complex model with local externalities.
Databáze: OpenAIRE
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