Play-Hysteresis in Supply as Part of a Market Model

Matthias Göcke ()

VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

Abstract: Consequences of path-dependent supply side hysteresis on the market equilibrium are illustrated. Supply is only a subsystem of the entire market with its forcing variable (price) being endogenous from the perspective of the entire market. This results in feedbacks on the equilibrium of price and quantity if transient exogenous disturbances occur. Aggregate hysteresis is modelled by continuous dynamics showing similarities to mechanical play . This contrast the standard firm level modelling of hysteresis resulting from discontinuous activity/inactivity switches. Non-linear play-dynamics are captured in a simple linearized way, just by adding two parameters to a supply equation.

JEL-codes: C39 C51 C61 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc13:79695

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