Normal Approximation of the Disrtibution of the Equilibrium Price in Markets with Random Demand and Supply

Martin Smid
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Martin Smid: Institute of Information Theory & Automation of the Academy of Sciences of the Czech Republic

GE, Growth, Math methods from University Library of Munich, Germany

Abstract: In the paper, the asymptotic distribution of the equilibrium price in markets with the random demand and supply is described. Two special cases - the one with smooth demand and supply curves and the one with jump demand and supply curves - are studied. It is found that in both the cases the fluctuations of the price vanish at the rate O(n^{-1/2}) as the number of the agents n tends to infinity. Finally, a normal approximation of the distribution of the equilibrium price is suggested.

Keywords: equilibrium price; random demand; random supply; asymptotic distribution; normal approximation (search for similar items in EconPapers)
JEL-codes: C6 D5 D9 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2004-11-28
New Economics Papers: this item is included in nep-mic
Note: Type of Document - pdf; pages: 13
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpge:0411001

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