dc.description.abstract | The objective of this project is to study ‘the cobweb effect’ in agricultural products. Based on
this effect we hypothesized that farmers expect price for their products based on their
information of previous prices. Due to the recency effect farmers consider current market
price as a basis while making crop selection decision.
The period which is required for the harvest would match with the delay in the response of
the supply in the market and subsequent price changes. Using regression analysis, we tried
to identify the correlation between past prices and arrival. While performing this regression
the efforts were focused on identifying the time range for which the prices would affect the
most on arrival.
Four crops namely Tomato, Onion, Arahar, Soybean were chosen for the study. The selection
was done considering the past behavior of commodities prices. These commodities showed
higher level of fluctuation. Two of these crops are perishables and others can be stored, this
would help get rid of externalities involved in the behavior. | en_US |