Complex dynamics in a cobweb model with adaptive production adjustment

Tamotsu Onozaki, Gernot Sieg, Masanori Yokoo

Research output: Contribution to journalArticle

28 Citations (Scopus)

Abstract

Chaos occurs in a nonlinear cobweb model with normal demand and supply, naive expectations and adaptive production adjustment. The model differs from existing ones in that it includes adaptive production adjustment instead of adaptive expectations. The model exhibits observable chaos (strange attractors) as well as topological chaos (horseshoes) associated with homoclinic points. As numerical simulations show, the faster suppliers adjust their production and the more inelastic demand is, the more likely the market behaves chaotically.

Original languageEnglish
Pages (from-to)101-115
Number of pages15
JournalJournal of Economic Behavior and Organization
Volume41
Issue number2
Publication statusPublished - Feb 1 2000
Externally publishedYes

Keywords

  • Adaptive production adjustment
  • D21
  • E32
  • Homoclinic point
  • Nonlinear cobweb model
  • Observable chaos
  • Topological chaos

ASJC Scopus subject areas

  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management

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