Computational Economics

, 38:425 | Cite as

Can Endogenous Participation Explain Price Volatility? Evidence from an Agent-Based Cobweb Model



This work provides a computational cobweb model with heterogeneous adaptive producers with endogenous market entry and exit. Firms face a borrowing constraint and so can go bankrupt. At the same time when average profits are positive there is an inflow of new firms in the market. Bounded dynamics and endogenous volatility are shown to follow without resorting to nonlinearities.


Heterogeneous agents Expectations Price instability Market entry and exit 


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Copyright information

© Springer Science+Business Media, LLC. 2011

Authors and Affiliations

  1. 1.DIMAD—Università di FirenzeFirenzeItaly

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