Cobweb Equation

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.