NONLINEAR DYNAMICS AND ECONOMIC INSTABILITY: THE OPTIMAL MANAGEMENT OF A BIOLOGICAL POPULATION
By: Chavas, Jean-Paul; Holt, Matthew T.
Chavas, Jean-Paul; Holt, Matthew T., NONLINEAR DYNAMICS AND ECONOMIC INSTABILITY: THE OPTIMAL MANAGEMENT OF A BIOLOGICAL POPULATION, Journal of Agricultural and Resource Economics, Volume 20, Issue 2, December 1995, Pages 231-246
Assuming a competitive market, conditions are determined for when a steady-state equilibrium does not exist in the optimal dynamic management of a biological population. Irregular and unpredictable behavior (called "chaos") can arise from fully rational economic decision making. High interest rate, adjustment costs, and an inelastic demand can contribute to market instability.