Learning not to trade: On scarcity, emergence and failure of markets

Özge Dilaver*

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

This paper addresses the substitution of virgin resources used in industrial processes with by-products that would otherwise be regarded as waste and questions why some byproduct markets fail to emerge. It highlights the long-forgotten distinction between the use-value and exchange-value and points out that markets can only work for assigning the latter. It argues that in some industrial settings, waste resources are not scarce and their supply schedule in the classical market plot are at the right of and far from the demand schedule. Hence, even though the waste resource has some positive use-value, a positive price level cannot be established at the intersection of demand and supply schedules. The paper employs agentbased simulations with zero-intelligence traders to illustrate that when agents are unable to learn, transactions do occur in the abovementioned context but when agents have simple adaptive capabilities, the market fails to emerge. Thereby, the paper employs the zero-intelligence traders in a different way than usual; whereas the literature on zero-intelligence traders aim to show markets can emerge even when agents lack rationality, this paper illustrates that markets can fail to emerge when agents have some ability to learn. Proceedings 28th European Conference on Modelling and Simulation

Original languageEnglish
Title of host publicationProceedings - 28th European Conference on Modelling and Simulation, ECMS 2014
Place of PublicationBrescia, Italy
PublisherEuropean Council for Modelling and Simulation
Pages732-737
Number of pages6
ISBN (Print)9780956494481
DOIs
Publication statusPublished - 30 May 2014
Externally publishedYes
Event28th European Conference on Modelling and Simulation, ECMS 2014 - Brescia, Italy
Duration: 27 May 201430 May 2014

Publication series

NameProceedings - 28th European Conference on Modelling and Simulation, ECMS 2014

Conference

Conference28th European Conference on Modelling and Simulation, ECMS 2014
Country/TerritoryItaly
CityBrescia
Period27/05/1430/05/14

Keywords

  • Agent-based modelling
  • Missing markets
  • Scarcity
  • Theory of value
  • Transaction cost
  • Zero-intelligence agents

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