On the significance of borders: the emergence of endogenous dynamics

Kubin, Ingrid and Gardini, Laura (2022) On the significance of borders: the emergence of endogenous dynamics. Journal of Economic Interaction and Coordination, 17. pp. 41-62. ISSN 1860-7128

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Abstract

We propose a prototype model of market dynamics in which all functional relationships are linear. We take into account three borders, defined by linear functions, that are intrinsic to the economic reasoning: non-negativity of prices; downward rigidity of capacity (depreciation); and a capacity constraint for the production decision. Given the linear specification, the borders are the only source for the emerging of cyclical and more complex dynamics. In particular, we discuss centre bifurcations, border collision bifurcations and degenerate flip bifurcations—dynamic phenomena the occurrence of which are intimately related to the existence of borders.

Item Type: Article
Additional Information: Open access funding provided by Vienna University of Economics and Business (WU).
Keywords: Capacity constraint, Depreciation constraint, Nonnegativity constraint, Piecewise smooth system, Border collision bifurcation, Centre bifurcation
Divisions: Departments > Volkswirtschaft > Kubin
Version of the Document: Published
Depositing User: Ingrid Kubin
Date Deposited: 01 Dec 2020 10:24
Last Modified: 15 Feb 2022 16:25
Related URLs:
FIDES Link: https://bach.wu.ac.at/d/research/results/97557/
URI: https://epub.wu.ac.at/id/eprint/7869

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