Cobweb theorem

The case of dampened fluctuations in the cobweb theorem: P = price, Q = production quantity (quantity) , S = supply (supply) , D = demand (demand) .

The case of explosive fluctuations (see legend above)

The cobweb theorem (also cobweb theorem ) represents an explanatory approach for the market price oscillating around the market equilibrium on the goods markets . The market price oscillates here depending on the course of the supply and demand curves around the market equilibrium with either increasing, constant or decreasing amplitude . The fluctuations in price and production are therefore explosive, constant or subdued.

The reason for this lies in time delays between the demand and the offer of the providers. These delays lead to disruptions in price functions . When planning their offer , the providers orient themselves to the prices of the current period. However, the offer will only come onto the market with a delay, for example in the next period. The demand depends on the price of the current period. If the supply is low in the initial situation, there is competition among the buyers, there is a sellers' market : only those buyers who are willing or able to pay a high price come into play. At the high price, however, suppliers who have high production costs can now also offer and come onto the market. This creates a high supply on the market, and there is competition among the suppliers, because the demanders are now only willing to buy the supply if it is offered at a low price: there is a buyer's market . At the lower price, inexpensive offers are no longer competitive. Suppliers have to withdraw or switch to other markets, so the supply is falling. The starting position has thus been reached again, and the cycle in which the seller and buyer markets alternate begins again.

The cobweb theorem is discussed as a theoretical explanation for the pig cycle , more generally for economic fluctuations of all kinds, for example in the context of business cycle theory . The dynamics can be mapped with the help of Lotka-Volterra equations .

The graph shows a spider web-like spiral, hence the name.

See also

• Cobweb diagram

literature

• Ezekiel, M .: The cobweb theorem . In: The quarterly journal of economics , Volume 52, pp. 255-280, Cambridge 1938
• A. Hanau (1928): The forecast of pig prices (PDF; 2.3 MB). In: Quarterly issues on economic research , Reimar Hobbing publishing house, Berlin. Here also references to articles by GC Haas and Ezekiel, M.
• U. Ricci (1930): The Synthetic Economy by Henry Ludwell Moore . In: Zeitschrift für Nationalökonomie , p. 649.
• Wolfgang Göbels: Supply and Demand - The market price as the limit value of a sequence . In: Journal MATHEMATIKLEHREN, Friedrich Verlag , Seelze, Issue 62, February 1994, pp. 47–49.

Individual evidence

1. ↑ Wolfgang Stützel, foreword by the editor, p. 4, in Wolfgang Stützel (Ed.), Wilhelm Lautenbach : Zins Kredit und Produktion, Tübingen 1952 ( PDF ( Memento of the original from October 17, 2013 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. ) 
2. ^ ^{A b} Leander L. Hollweg: Keynes in the light of modern complexity theory, RIKES Research Institute for Knowledge-based Economic Systems, Discussion Paper 1/2011, contribution for the Seventh Annual Meeting of the Keynes Society on 21./22. February 2011 in Izmir, Turkey. RIKES & Research & Institute & for & KnowledgeAbased & Economic & Systems, & Discussion & Paper & 1/2011

Web links

• Cobweb theorem - definition and explanation at the Gabler Wirtschaftslexikon