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Kinetic Models for the Exchange of Production Factors in a Multi-agent Market

Author

Listed:
  • Hongjing Chen

    (Chengdu University of Information Technology
    Key Laboratory of Statistical Information Technology and Data Mining, State Statistics Bureau)

  • Chong Lai

    (Chengdu University of Technology)

  • Hanlei Hu

    (Chengdu University of Information Technology)

Abstract

A kinetic model of binary interactions is developed to describe an exchange market consisting of two groups (A and B) of manufacturing enterprises and two types of production factors (capital and labor). The relationship between production factors and output satisfies the Cobb-Douglas production function. The objective of the manufacturing enterprise is to obtain maximum profits. In the multi-agent market, manufacturing enterprises exchange surplus production factors for insufficient production factors. We assume that manufacturing enterprises in group A put all of the production factors into the market, while the manufacturing enterprises in group B have the priority of selecting a suitable percentage of production factors for exchange. A system of linear kinetic equations is developed for two groups of manufacturing enterprises to characterize the evolution of the quantity of exchanged production factors. The effect of various strategies on the price of production factors and the profit of manufacturing enterprises is explored. The findings reveal that the trading strategy of group B significantly impacts the price of production factors and effectively improves the profit under certain conditions. Furthermore, a system of Boltzmann equations for the probability distribution of production factors is presented to describe the price issues. Simulation experiments illustrate how the trading strategy and the elasticity coefficient of output influence the final price of production factors.

Suggested Citation

  • Hongjing Chen & Chong Lai & Hanlei Hu, 2024. "Kinetic Models for the Exchange of Production Factors in a Multi-agent Market," Computational Economics, Springer;Society for Computational Economics, vol. 63(6), pages 2559-2584, June.
    • Handle: RePEc:kap:compec:v:63:y:2024:i:6:d:10.1007_s10614-023-10417-z
    DOI: 10.1007/s10614-023-10417-z
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    References listed on IDEAS

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