Dynamic analysis of the game between land supply and housing prices

Abstract

A non-linear dynamic game between land supply and housing prices, based on disequilibrium theory and non-linear cobweb mode, is established in this paper. The influence of land price adjustment measures on housing prices is analysed with the assumption that the demand function is non-linear and the supply function is linear. Given a fully inelastic land supply, a land price adjustment parameter and a housing price adjustment parameter are introduced into the non-linear dynamic model. We observe that the evolution of the system varies with the above two parameters. The path leading the system from stability to bifurcation, then to period doubling bifurcation, and finally to chaos is also found. A numerical simulation is provided to demonstrate the dynamic behaviour.

Keywords:

• Game
• Cobweb model
• Housing prices
• Bifurcation
• Chaos

AMS Subject Classifications :

• 74H60
• 74H65
• 65P20

Acknowledgements

This paper was presented at ICDVC-2006 (Second International Conference on Dynamics, Vibration and Control). This study is supported by the National Natural Science Foundation of China (60641006).