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Market Instability and Nonlinear Dynamics
Author(s) -
Chavas JeanPaul,
Holt Matthew T.
Publication year - 1993
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1242959
Subject(s) - instability , nonlinear system , economics , dynamics (music) , supply , econometrics , microeconomics , physics , mechanics , quantum mechanics , acoustics
The potential role of nonlinear dynamics in generating market instability is investigated using a simple market equilibrium model of the U.S. dairy industry. The supply function reflects the nonlinear dynamics of the dairy herd, as estimated by Chavas and Klemme. It is shown that, in the absence of any uncertainty, an inelastic demand contributes to market instability and chaos.