A Multiplier Effect Model for Price Stabilization Networks

We consider a multiagent network model consisting of nodes and edges as cities and their links to neighbors, respectively. Each network node has an agent and priced goods, where the agent can buy or sell goods in the neighborhood. Though every node may not have an equal price, we can show the prices will reach an equilibrium by iterating buy and sell operations. We introduce a protocol in which each buying agent makes a bid to the lowest priced goods in the neighborhood; and each selling agent selects the highest bid (if any). We are interested in how some conventional theory, for instance, the multiplier effect is reconstructed in our model. Thus, we develop an multiplier effect model which enables us to apply a fiscal policy to our price stabilization networks. Our model also includes reducing inventory stocks if there is an excess supply. Finally, we run simulation experiments and investigate the influence of network features on the reduction of inventory stocks.