Commodity prices rise sharply at turning points


Commodity prices depend on supply and demand. With an uneven distribution of resources, prices are high at locations starved of commodity and low where it is abundant. We introduce an agent-based model in which agents set their prices to maximize profit. At steady state, the market self-organizes into three groups: excess producers, consumers, and balanced agents. When resources are scarce, prices rise sharply at a turning point due to the disappearance of excess producers. Market data of commodities provide evidence of turning points for essential commodities, as well as a yield point for non-essential ones.

Divisions: College of Engineering & Physical Sciences > Systems analytics research institute (SARI)
College of Engineering & Physical Sciences > School of Computer Science and Digital Technologies > Applied Mathematics & Data Science
PURE Output Type: Working paper
Published Date: 2017
Submitted Date: 2017
Authors: Li, Bin
Saad, David (ORCID Profile 0000-0001-9821-2623)
Wong, K.Y. Michael
Chan, Amos H.M.
So, Tsz Yan
Heimonen, Hrmanni



Version: Draft Version

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