The simple first-order difference equation

(1)

where

			(2)
			(3)

and

			(4)
			(5)

are the price-demand and price-supply curves, where and represent the slope and -intercept, respectively, for the demand curve, and and represent the corresponding constants for the supply curve (Ezekiel 1938, Goldberg 1986).

A class of behaviors related to this equation is known as "Cobweb phenomena" in economics.

This entry contributed by Ronald M. Aarts

Ezekiel, M. "The Cobweb Theorem." Quart. J. Econ. 52, 255-280, 1938.

Goldberg, S. Introduction to Difference Equations, with Illustrative Examples from Economics, Psychology, and Sociology. New York: Dover, 1986.

CITE THIS AS:

Aarts, Ronald M. "Cobweb Equation." From MathWorld--A Wolfram Web Resource, created by Eric W. Weisstein. http://mathworld.wolfram.com/CobwebEquation.html