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• Eveline, Is the price adjustment of each shop essentially to take place within a tick, or over n ticks? That is, is each shop finding its optimal price (that
Message 1 of 3 , Sep 30, 2009
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Eveline,

Is the price adjustment of each shop essentially to take place within a tick, or over n ticks? That is, is each shop finding its optimal price (that is, the price that maximizes its profits) for the next period, or is it simply experimenting by changing price over several periods until its profits have stabilized? Since you are looking at one firm at a time in the adjustment process, I'm assuming that you mean the first.

If the first, then given the demand function of consumers, the optimal price might simply be calculated, given the previous price of the other shop, unless, of course, the demand function defies an explicit solution. If that is the case, there are some simple "hill climbing" algorithms that would find the price that maximizes profits.

Cordially,
Charles

--- In netlogo-users@yahoogroups.com, "eleeuwen" <eleeuwen@...> wrote:
>
>
> Can somebody help me with the following problem:
>
> I want to built a model with consumers and 2 shops: if one of the shops
> rises its price, the consumers will make a new choice between the 2.
> Their choice depends on their costs which is defined as price*distance,
> the price will change, the distance doesn't change in the simple
> model.
>
> The shop will rise its price until profitt <= profit t-1 (so at the
> former tick), the profit is defined as price*number of consumers
>
> How can I let 1 shop to raise its price until the optimum situation, and
> between each rise of price have the consumers make a new decision? Than
> shop 2 will do the same?
>
> This is what should happen:
>
> Consumers choose for shop 1 or 2
>
> Shop 1 raises its price
>
> Consumers choose for shop 1 or 2
>
> Shop 1 calculates its profit and if profitt > profit t-1 it will raise
> the price again.
>
> Consumers choose for shop 1 or 2
>
> Shop 1 calculates its profit and if profitt > profit t-1 it will raise
> the price again, if profitt <= profit t-1 it will stop.
>
> Shop 2 raises its price
>
> Consumers choose for shop 1 or 2
>
> Shop 2 calculates its profit and if profitt > profit t-1 it will raise
> the price again.
>
> Consumers choose for shop 1 or 2
>
> Shop 2 calculates its profit and if profitt > profit t-1 it will raise
> the price again, if profitt <= profit t-1 it will stop.
>
> Many thanks!
>
>
>
> Eveline
>
• Dear Charles, many thanks for your reaction. Concerning the hill climbing algorithms, do the turtles actually have to move then, or can they do something until
Message 1 of 3 , Oct 2, 2009
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Dear Charles,

Concerning the hill climbing algorithms, do the turtles actually have to move then, or can they do something until a certain value does not increase anymore?

Best wishes,
Eveline

--- In netlogo-users@yahoogroups.com, "Charles" <cstaelin@...> wrote:
>
> Eveline,
>
> Is the price adjustment of each shop essentially to take place within a tick, or over n ticks? That is, is each shop finding its optimal price (that is, the price that maximizes its profits) for the next period, or is it simply experimenting by changing price over several periods until its profits have stabilized? Since you are looking at one firm at a time in the adjustment process, I'm assuming that you mean the first.
>
> If the first, then given the demand function of consumers, the optimal price might simply be calculated, given the previous price of the other shop, unless, of course, the demand function defies an explicit solution. If that is the case, there are some simple "hill climbing" algorithms that would find the price that maximizes profits.
>
> Cordially,
> Charles
>
>
>
> --- In netlogo-users@yahoogroups.com, "eleeuwen" <eleeuwen@> wrote:
> >
> >
> > Can somebody help me with the following problem:
> >
> > I want to built a model with consumers and 2 shops: if one of the shops
> > rises its price, the consumers will make a new choice between the 2.
> > Their choice depends on their costs which is defined as price*distance,
> > the price will change, the distance doesn't change in the simple
> > model.
> >
> > The shop will rise its price until profitt <= profit t-1 (so at the
> > former tick), the profit is defined as price*number of consumers
> >
> > How can I let 1 shop to raise its price until the optimum situation, and
> > between each rise of price have the consumers make a new decision? Than
> > shop 2 will do the same?
> >
> > This is what should happen:
> >
> > Consumers choose for shop 1 or 2
> >
> > Shop 1 raises its price
> >
> > Consumers choose for shop 1 or 2
> >
> > Shop 1 calculates its profit and if profitt > profit t-1 it will raise
> > the price again.
> >
> > Consumers choose for shop 1 or 2
> >
> > Shop 1 calculates its profit and if profitt > profit t-1 it will raise
> > the price again, if profitt <= profit t-1 it will stop.
> >
> > Shop 2 raises its price
> >
> > Consumers choose for shop 1 or 2
> >
> > Shop 2 calculates its profit and if profitt > profit t-1 it will raise
> > the price again.
> >
> > Consumers choose for shop 1 or 2
> >
> > Shop 2 calculates its profit and if profitt > profit t-1 it will raise
> > the price again, if profitt <= profit t-1 it will stop.
> >
> > Many thanks!
> >
> >
> >
> > Eveline
> >
>
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