Commodity price fluctuations: Price dependent delays and nonlinearities as explanatory factors

This paper develops a price adjustment model for a single commodity market with state dependent production and storage delays. Conditions for the equilibrium price to be stable are derived in terms of a variety of economic parameters. When stability of the equilibrium price is lost a Hopf bifurcation occurs, giving rise to an oscillatory commodity price with a period between two and four times the equilibrium production-storage delay.

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