Cobweb model

The Spinnwebtheorem (also cobweb theorem, English:. Cobweb theorem ) provides an explanation for the oscillatory to the market equilibrium market price on the goods markets, as the market price oscillates in this case depends on the course of the supply and demand curves for the market equilibrium with either increasing, constant or decreasing amplitude. The price and production fluctuations are so explosive, or dampened constant.

The reason for this lies in Time lags in time delays between the demand and the supply of providers. These delays cause interference pricing functions. The suppliers are based in the planning of their offer to the prices of the current period. The offer is, however, only delayed, as in the next period, to the market. The demand depends on the price of the current period. If in the starting position offering low, it comes to competition among the buyers, and there's a seller's market: Only those buyers come into play that are willing or able to pay a high price. At the high price but can now also providers offer have high production costs, and come in addition to the market. This creates a high level of supply on the market, and it comes to competition among providers, because the buyers are now only willing to offer to buy, if it is offered at a low price: There is a buyer's market. At the lower price are cost unfavorable deals no longer competitive. Provider must retreat or evade to other markets, so the supply is decreasing. Thus, the starting point is reached again and the cycle in which sellers and buyers market alternated starts again.

The Spinnwebtheorem is discussed as a theoretical explanation for the so-called pig cycle, generally for economic fluctuations of all kinds, eg in the context of economic theory. The dynamics can be shown with the help of Lotka -Volterra equations.

In the graph, there is a spider web -like spiral, hence the name.