Supply Demand Modeling

Question

I thought I would ask the SO community on helping me with a project that I am currently working on. I need to model the price for a widget in a market situation. The price for the widget should be a result from the current supply and demand. Users will be able to buy and sell the widget at the fixed price. As users buy the widget the demand will go up along with the price. Conversely as users sell the widget the supply will go up and the price will go down. The quantity and current price of the widget will be stored in a database along with the total number of buys and sells for the widget.

Protrade.com has an excellent example of buying and trading widgets (players and teams), I would want to model my system in a similar fashion.

Is there any good programming libraries that will accurately model a market based on supply and demand?

Answer 1

Unfortunately I do not know of any libraries, but perhaps you can tap into Excel's statistics functions.

My opinion follows.

This is why economics is so boring, everything is supply/demand.

Something along the lines of the following should work as a start:

ListPrice = (Cost + Profit) * (demand/supply * economic-factor)

where economic-factor is some determined constant.

If you have some historical data, eg daily supply/demand ratio's you could factor it in, perhaps using some time-based scale.