DOIONLINE 
DOIONLINE Publish In |
International Journal of Management and Applied Science (IJMAS)-IJMAS |
 Journal Home Volume Issue |
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Issue |
Volume-3,Issue-10 ( Oct, 2017 ) | |||||||||
Paper Title |
Dynamics of Price Stabilization: Continuous- Versus Discrete-Time Cobweb Models With Buffer Stock | |||||||||
Author Name |
Anokye, Martin, Oduro, T. Francis | |||||||||
Affilition |
Department of Mathematics and Statistics, University of Cape Coast, Cape Coast, Ghana College of Science, Kwame Nkrumah University of Science and Technology, Kumasi Ghana | |||||||||
Pages |
44-51 | |||||||||
Abstract |
This paper compared the dynamics of continuous-time nonlinear delay differential cobweb model with buffer stock to discrete-time nonlinear cobweb model with buffer stock, through simulation of real economic data of maize price demand and production in the Ashanti Region of Ghana. The nonlinear delay differential equation model, before the application of buffer stock scheme had price oscillated between two price points and could not converge, which affirms the condition of nonlinear model under naïve price expectation. It is established in the study that delay parameter is price stability dependent and also associated with price fluctuations. The nonlinear delay differential buffer stock model achieved price stability without varying the parameters values of supply function as opposed to discrete-time cobweb models.It was noted that, the more buffer stock delay and supply delay are well adjusted in connection with the price scheme run by buffer stock operators, the more stable the price becomes and the impact of buffer stock felt in the system. The results of the analysis provided an average stable price of maize as GH¢ 30.49 compared to the actual average price of GH¢30.27, which in turn determined the average stock during harvesting season. Nonlinear discrete-time cobweb model on the other hand, could not meet the naïve price expectation condition until parameter values were reviewed. This made the predicted values of average price and stock unrealistic. It was found that, discrete-time buffer stock model performed well under linear models than in the nonlinear models, which is a limiting case of the delay buffer stock model used in this study. It is therefore, presumed from the study that researchers would rather use continuous-time nonlinear delay models as they reflect realities prevailing in most market economic problems. Keywords- buffer stock, price stabilization, delay-differential equation, cobweb models | |||||||||
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