A Generalization of Modeling for Markets of Substitutive Raw Materials: Effects of Introducing New Good on the Volatility of Price and Trade Volume of the Gross Substitutes
- 서울대학교 경제연구소
- Seoul Journal of Economics
- Seoul Journal of Economics Volume 6 No.3
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1993.09267 - 281 (14 pages)
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In this paper we generalize a commodity market model to n gross substitutes. We analyse the specification errors if some gross substitutes are neglected. We proved the following main proposition that the volatility of market price and trade volume for each of the n gross substitutes will be underspecified in a model in which at least one of the gross substitutes is not considered, and the degree of the specification error for the price volatility and the trade volume is more serious the higher the number of gross substitutes not considered in a model.
Abstract
Ⅰ. Introduction
Ⅱ. Generalization of the Connective Competitive Markets Model for Any Number of Gross Substitutes: The Le Chatelier Principle
Ⅲ. Modeling of Gross Substitutes between Raw Materials and Industrial Man-made Materials
Ⅳ. Support Price and Volatility of Price and Trade Volume
Ⅴ. New Gross Substitute and the Volatility of Price and Trade Volume: A Corollary
Ⅵ. Conclusion
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