The cobweb model: Its instability and the onset of chaos

Abstract

We introduce a fairly general non-linear supply function into the traditional cobweb model under adaptive expectations. We find that the dynamics of the model are driven by a single hump map of the type that occurs in the chaos literature. By applying some recent results of Feigenbaum we are able to show that in its locally unstable region the cobweb model exhibits a regime of period doubling followed by a chaotic regime.