Play-hysteresis in supply as part of a market model
Matthias Göcke ()
No 61, Discussion Papers from Justus Liebig University Giessen, Center for international Development and Environmental Research (ZEU)
Consequences of path-dependent supply side 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. Play dynamics are captured in a simple linearized way, just by adding two parameters to a supply equation.
Keywords: path-dependence; play-hysteresis; modelling techniques (search for similar items in EconPapers)
JEL-codes: C39 C51 C61 (search for similar items in EconPapers)
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Working Paper: Play-Hysteresis in Supply as Part of a Market Model (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zeudps:61
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