Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5098305 | Journal of Economic Dynamics and Control | 2015 | 14 Pages |
Abstract
We present a model of interacting cobweb markets and apply it to land-use competition between food and bioenergy crops. In our model the markets are interlinked on the supply side by the limited availability of land. Therefore, instabilities are transferred between the markets and we find that bioenergy demand affects food price volatility. The agents in the model have heterogeneous production capacities, representing variation in global land quality. When we allow agents to choose price predictor, we find that a more sophisticated (but costly) predictor is concentrated to some key parcels of land, which enables the system to reduce instability significantly. The system can also be brought closer to a stable state by introducing costs for changing production type, but it may then be shifted away from the optimum situation predicted by the corresponding equilibrium model.
Keywords
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Liv Lundberg, Emma Jonson, Kristian Lindgren, David Bryngelsson, Vilhelm Verendel,