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BY 4.0 license Open Access Published by De Gruyter Open Access May 27, 2013

Cobweb Theorems with Production Lags and Price Forecasting

Daniel Dufresne and Felisa Vázquez-Abad EMAIL logo
From the journal Economics

Abstract

The classical cobweb theorem is extended to include production lags and price forecasts. Price forecasting based on a longer period has a stabilizing effect on prices. Longer production lags do not necessarily lead to unstable prices; very long lags lead to cycles of constant amplitude. The classical cobweb requires elasticity of demand to be greater than that of supply; this is not necessarily the case in a more general setting. Random shocks are also considered.

JEL Classification: C02; C62; E32

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Received: 2012-02-26
Revised: 2013-04-17
Accepted: 2013-04-18
Published Online: 2013-05-27
Published in Print: 2013-12-01

© 2013 Daniel Dufresne et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

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