Muhamad Ayman Kassar



Simulation models for economics

Project work on

"Bazar market."

 

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see also Mall market

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view/download model file: bazar_market.nlogo

WHAT IS IT?

This is a model illustrating the mechanism of exchange in the Bazaar Market, which is traditional in Arabic countries.
We've created two agent sets (buyer and seller) interacting to perform a transaction.
the determinant factor in setting the deal is the good's price. In this market buyers will move arround, meet sellers and bargain with them in order to achieve the best deal.
Bueyrs have three levels of bargaining capacity, the first one makes their bargaining power stronger than seller's one, so they can achieve the deal at a price close to seller's reservation price, the second one makes them as strong as sellers in bargaining so the price will be in the middle, the third one is weak for buyers so sellers can push up the deal-price to be close to buyer's reservation price so they can achieve the maximum profit.


HOW IT WORKS

Buyers (colored in yellow) move arround and meet sellers (colored in blue) who are fixed (sitted on desks ),start negotiating with them in order to get the best price (deal-price should be less then their reservation price)
after performing the deal buyer's color changes to green, they keep looking for other sellers to perform another deals.
The deal-price will be function of buyers bargaining capacity, if it's strong they will be able to reduce deal-price to be close to seller's reservation price, if it's weak they will buy at a high price (almost equal their reservation price), if it is in the middle the deal-price will be in the middle between buyer's and seller's reservation price.


HOW TO USE IT

The click the setup button to create a new market with it's agents, then clicking the button go buyers will start moving in the market and meeting sellers seeking for convenient deals. The user can change buyer's bargaining capacity in the market using the slides set for this purpose, you can find it on the left side of the screen and he can change buyer's reservation price and seller's reservation price using the slides on the left side as well.


THINGS TO NOTICE

You can notice by changing the bargainig power of buyers that the deal-price distribution will change from poisson distribution for levels (1,3) to normal distribution for level (2).


CREDITS AND REFERENCES

Our reference for this work is a paper "What if Hayek goes shopping in the Bazaar?" written by Lamieri e Bertacchini.