Cobweb Theorem in Relation to the Fruit Market

Abstract

The cobweb theorem is the economic theory on the dynamic equilibrium analysis, which is used not only in agriculture but, when some conditions are fulfilled, on the various markets as well. The theorem assumes, that producers base their current output on the average price which they obtain in the market during the previous year. Some researchers accuse, however, that this theorem simplifies the reality too much, especially while contemporary market is developed and complex. This theorem derives, however, from the agricultural market, where was primary observed in practice. What was quite predictable was the fact, that nowadays influence of farm-gate price value from previous year is statistical insignificant factor on the way to make the production decisions up. This conclusion let us suppose, that producers are conscious market players. Their production decisions are derivatives of other factors. The statistical tools used in this paper it is the correlation analysis with lags for first differences of time series of prices and harvested area of raspberry, chokeberry and black currant.

Determinants of Barley Output Supply Response in Ethiopia: Application of Ardl Bound Cointegration Approach

“…The Cobweb Model is the lag between production decisions and the realization of demand and market prices [22] . According to Serena Brianzoni (2018), the cobweb model is a dynamical system that describes price fluctuations as a result of the interaction between demand function, depending on current price, and supply function, depending on expected price [23] .…”