Editing Cobweb model (section)

{{Short description|Non-equilibrium model of supply and demand}}
The '''cobweb model''' or '''cobweb theory''' is an [[economic model]] that explains why [[price]]s may be subjected to periodic fluctuations in certain types of [[Market (economics)|market]]s. It describes cyclical [[supply and demand]] in a market where the amount produced must be chosen before prices are observed. Producers' [[Expected value|expectation]]s about prices are assumed to be based on observations of previous prices. [[Nicholas Kaldor]] analyzed the model in 1934, coining the term "cobweb theorem" (see Kaldor, 1938 and Pashigian, 2008), citing previous analyses in German by [[Henry Schultz]] and [[Umberto Ricci]].