Endogenous Market Process Simulation:
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Primitive Market Formation: an Agent-based Model
This project studies the process of market formation depend on the locating and pricing strategies of agents that can produce, exchange, and consume goods in each period. We view location selection and pricing system as a whole and set up an agent-based model to explore the factors contributing to market structure and the impact on its change by pricing system. We find parameters like the ratio of number of agents and locations and the ratio of production and consumption has a strong influence on markets structure. We then add a bargaining system into the model, and find the market structure changes under certain condition such as when production rate equals to consumption rate. Also, the relative price by bartering converges to a private but common price.