Probabilistic Economic Theory - страница 15

Fig. 2. S&D diagram displaying dynamics of the classical two-agent market economy in the time-S&D functions coordinate system [T, S&D], within the first time interval [t_>1, t_>1^>E].

Having a method to more or less evaluate the price quantitatively is always advantageous, as it helps us to somewhat predict market prices. Using the main rule of work on the market is used to this end, and this strategic rule of decision making can be briefly formulated as follows: “Sell all – Buy at all”. This main market rule indicates the following different strategies of market actions (action on the market is setting out quotations) for both the seller and the buyer. For the seller this strategy consists in striving to sell all the goods planned to sale at the maximally possible highest prices. Whereas for the buyer this strategy consists in the fact that it will expend all the money planned for the purchase of goods and try to purchase in this case as much as possible at the possible smallest price. Thus, the main market rule leads to the corresponding algorithms of the actions of agents on the markets, which are graphically represented in the form of agents’ trajectories in the pictures. The point of intersection and the respective trade volume in the market, MTV, are easily found with the help of the following mathematical formulas:

It is natural here to name D_>1^>0(t_>1) the total demand of buyer at the initial moment of trading. The sense of this quantity is in the fact that this is quantity of resources, planned for the purchase of goods, expressed in the money, although the dimension of this demand is the dimension of money price ($/ton) multiplied by the dimension of quantity (ton). In our case, this is $. We emphasize that, over the course of development of quantitative theory, this is very important in order to draw attention to the dimension of the used quantities and parameters, and to the normalization of the applied functions (see below).

By analogy with classical mechanics, we can treat these prices and quantity functions as the trajectories of movement of the market agents in the two-dimensional economic PQ-space as it was displayed in Fig. 3.

In principle, this representation gives nothing new in comparison with Figs. 1 and 2. Nevertheless, there is one interesting nuance here, in which the similarity of this diagram can be compared to the traditional picture in the conceptual neoclassical model of S&D. We will examine this question below. But let us now focus attention on the following nuances in the picture in Fig. 3. First, it is clearly shown by the arrows, that the buyer and the seller seemingly move towards each other on the price, with the seller reducing it, and the buyer, on the contrary, increasing it. From this, we can reflect on the illustration of normal market negotiation processes. Secondly, usually the quotations of quantities are reduced during the process of negotiations both by the buyer and by the seller. Clearly, all agents want to purchase or to sell a smaller quantity of goods at the compromise market price than at the most desired, presented at the very beginning of trading.

Fig. 3. Dynamics of the classical two-agent market economy in the two-dimensional economic price-quantity space within the first time interval [