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Computational Economics
Article . 2024 . Peer-reviewed
License: Springer Nature TDM
Data sources: Crossref
image/svg+xml Jakob Voss, based on art designer at PLoS, modified by Wikipedia users Nina and Beao Closed Access logo, derived from PLoS Open Access logo. This version with transparent background. http://commons.wikimedia.org/wiki/File:Closed_Access_logo_transparent.svg Jakob Voss, based on art designer at PLoS, modified by Wikipedia users Nina and Beao
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Interacting Cobweb Demands

Authors: Pinna, Lorenzo; Ricchiuti, Giorgio;

Interacting Cobweb Demands

Abstract

This paper proposes a simple, stylized two-good, two-market dynamical cobweb model. Consumers and producers are located in two countries, where they can choose to consume either locally produced or imported goods. We introduce a heuristic rule for consumers, which considers a convex combination of purchasing the cheapest good and the expected intrinsic quality of the two goods. Numerical simulations demonstrate that the interconnection between markets is a primary driver of instability, manifesting through either a flip or a Hopf bifurcation. Additionally, the dynamics depend closely on the price-quality trade-off. We identify three scenarios: when only price matters, a stable period-2 cycle arises; when only quality matters, the system converges; and in intermediate cases, complex dynamics emerge. Notably, we discovered a boundary crisis region, where there is a sudden shift from a chaotic attractor to stability. Finally, as a brief extension, we analyze the system when tariffs are considered for policy purposes.

Keywords

Interacting Markets, HAM, Trade, Consumer Choice, Consumer Heuristics Dynamical Systems

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This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
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popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
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