A MODEL ON MARKET EQUILIBRIUM USING A DIFFERENTIAL EQUATION WITH TIME DELAYS

In this paper, a model on market equilibrium is proposed using a delay differential equation with discrete delays as a modified version of the one proposed by Kobayashi (1996). The price of a commodity is determined using the equation involving weighted supply and demand functions. Both supply and demand functions are considered at the current time and sometimes in the past. The delays are chosen by considering the seasonal behavior of the market. We use data on some main commodities in Indonesia from 2018 to 2024 to validate the model. We found that the implementation of our modified Kobayashi model improves the estimation given by the original one. The implementation of the method also shows some characteristics of delay equations, that is longer delay time may include more dynamics, and more fluctuation, although that means it is more prone to instabilities. However, the problem of optimal delay time is yet to be resolved.