A Discrete Model of Market Adaptation

Voronin Anatolii and Gunko Olga V.
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Voronin Anatolii: Kharkiv National University of Economics
Gunko Olga V.: Kharkiv National University of Economics

Business Inform, 2013, issue 4, 158_162

Abstract: The article offers a dynamic model of market price formation and production, which allows identification of general regularities of influence of production and technological specific features upon evolution of an economic system. Balance relations, which unite approaches of L. Walras and A. Marshall for description of dynamics of prices and volumes of industrial production of one commodity in the market, serve as the theoretical basis of building the model. Synthesised mathematical model is a system of two linear differential equations for identifying price and volume of the commodity in discrete time. Conditions of stability of the equilibrium position have been obtained for this dynamic system and a relevant parametric analysis was conducted. The article considers in detail periodical modes of functioning of the studied system from the point of view of the theory of economic cycles. The problem of influence of autonomous fluctuations on the demand side in general upon dynamics of price formation and volume of commodity output are considered as an example. Numerical results, which demonstrate all types of fluctuation behaviour including harmonic beat and resonance, are presented with the help of the means of computer modelling.

Keywords: price; volume; demand; supply; balance; stability; fluctuations; resonance (search for similar items in EconPapers)
Date: 2013
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