Market Instability and Nonlinear Dynamics

Jean-Paul Chavas () and Matthew Holt

American Journal of Agricultural Economics, 1993, vol. 75, issue 1, 113-120

Abstract: The potential role of nonlinear dynamics in generating market instability is investigated using a simple market equilibrium model of the U.S. dairy industry. The supply function reflects the nonlinear dynamics of the dairy herd, as estimated by Chavas and Klemme. It is shown that, in the absence of any uncertainty, an inelastic demand contributes to market instability and chaos.

Date: 1993
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:75:y:1993:i:1:p:113-120.

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