TITLE:
A Model of the Market Process with Numerical Simulation
AUTHORS:
Ricardo Luis Chaves Feijó, Fabio Barbieri
KEYWORDS:
Numerical Simulation, Alertness, Market Process
JOURNAL NAME:
Modern Economy,
Vol.9 No.11,
November
20,
2018
ABSTRACT: The paper simulates the
price-arbitrage process at the market for homogeneous good and tries to show
the convergence into a single price from different cross-linked markets of this
homogeneous good. It examines the problem by random generation of values in the
simulation environment offered by the Matlab program. It is emphasized here the
approach in which the agent’s alertness is crucial to the market. The emphasis
is not on the price that equilibrates supply and demand, since there is not a
single price for a homogeneous commodity. A homogeneous good is negotiated with
different prices in different parts of a market. The paper explains the process
in which the agent’s alertness leads to a uniform price in terms of a
simulation model, in the belief that that technique leads to a better
understanding of the precise nature of the market process and the agent’s
alertness role in equilibration. The paper also discusses the effects of the
heterogeneous agents and market barriers in the market convergence process. The
innovative feature of the paper is the simulation experiment.