Using Hybrid Agent-Based Systems to Model Spatially-Influenced Retail Markets

One emerging area of agent-based modelling is retail markets; however, there are problems with modelling such systems. The vast size of such markets makes individual-level modelling, for example of customers, difficult and this is particularly true where the markets are spatially complex. There is an emerging recognition that the power of agent-based systems is enhanced when integrated with other AI-based and conventional approaches. The resulting hybrid models are powerful tools that combine the flexibility of the agent-based methodology with the strengths of more traditional modelling. Such combinations allow us to consider agent-based modelling of such large-scale and complex retail markets. In particular, this paper examines the application of a hybrid agent-based model to a retail petrol market. An agent model was constructed and experiments were conducted to determine whether the trends and patterns of the retail petrol market could be replicated. Consumer behaviour was incorporated by the inclusion of a spatial interaction (SI) model and a network component. The model is shown to reproduce the spatial patterns seen in the real market, as well as well known behaviours of the market such as the "rocket and feathers" effect. In addition the model was successful at predicting the long term profitability of individual retailers. The results show that agent-based modelling has the ability to improve on existing approaches to modelling retail markets.Agents, Spatial Interaction Model, Retail Markets, Networks

Spatial competition and price formation

We look at price formation in a retail setting, that is, companies set prices, and consumers either accept prices or go someplace else. In contrast to most other models in this context, we use a two-dimensional spatial structure for information transmission, that is, consumers can only learn from nearest neighbors. Many aspects of this can be understood in terms of generalized evolutionary dynamics. In consequence, we first look at spatial competition and cluster formation without price. This leads to establishement size distributions, which we compare to reality. After some theoretical considerations, which at least heuristically explain our simulation results, we finally return to price formation, where we demonstrate that our simple model with nearly no organized planning or rationality on the part of any of the agents indeed leads to an economically plausible price.Comment: Minor change

Data Aggregation and Vertical Price Transmission: An Experiment with German Food Prices

The impact of cross sectional aggregation over individual retail stores on the estimation and testing of vertical price transmission between the wholesale and retail levels is investigated using a unique data set of individual retail prices in Germany. Systematic differences between the results of estimations using aggregated data on the one hand, and disaggregated data on the other, are discussed theoretically and confirmed empirically. The results suggest that estimation with aggregated data generates misleading conclusions about price transmission behavior at the level of the individual units (i.e. retail stores) that underlie these aggregates.Aggregation, Vertical Price Transmission, Food Prices, Germany, Demand and Price Analysis, Marketing, L11, D40,

CAST – City analysis simulation tool: an integrated model of land use, population, transport and economics

The paper reports on research into city modelling based on principles of Science of Complexity. It focuses on integration of major processes in cities, such as economics, land use, transport and population movement. This is achieved using an extended Cellular Automata model, which allows cells to form networks, and operate on individual financial budgets. There are 22 cell types with individual processes in them. The formation of networks is based on supply and demand mechanisms for products, skills, accommodation, and services. Demand for transport is obtained as an emergent property of the system resulting from the network connectivity and relevant economic mechanisms. Population movement is a consequence of mechanisms in the housing and skill markets. Income and expenditure of cells are self-regulated through market mechanisms and changing patterns of land use are a consequence of collective interaction of all mechanisms in the model, which are integrated through emergence

Agent-based pedestrian modelling

When the focus of interest in geographical systems is at the very fine scale, at the level of streets and buildings for example, movement becomes central to simulations of how spatial activities are used and develop. Recent advances in computing power and the acquisition of fine scale digital data now mean that we are able to attempt to understand and predict such phenomena with the focus in spatial modelling changing to dynamic simulations of the individual and collective behaviour of individual decision-making at such scales. In this Chapter, we develop ideas about how such phenomena can be modelled showing first how randomness and geometry are all important to local movement and how ordered spatial structures emerge from such actions. We focus on developing these ideas for pedestrians showing how random walks constrained by geometry but aided by what agents can see, determine how individuals respond to locational patterns. We illustrate these ideas with three types of example: first for local scale street scenes where congestion and flocking is all important, second for coarser scale shopping centres such as malls where economic preference interferes much more with local geometry, and finally for semi-organised street festivals where management and control by police and related authorities is integral to the way crowds move

The farm decision role of price information from commodity exchanges: an ex-ante evaluation using quasi-rational price expectations in Ethiopia

Farmers use different information to predict future returns upon which they base current decisions. In designing information systems, knowledge about the information set used by farmers is relevant to have insight into the necessary information that should be made available for farmers. Using quasirational forecasting regression analysis to represent producer price expectation formation, the usefulness of disseminating real time information about the central wholesale prices discovered by the Ethiopian commodity exchange was tested. The results showed that the information about central wholesale prices can help farmers to make unbiased price forecasts. Effective dissemination of real time price information discovered through the Ethiopian commodity exchange was fully supported by the empirical insights from this study

An Evolutionary Model for Spatial Location of Economic Facilities

Locating an economic facility, warehouse, plant, retail store, etc., is one of the most important questions that a business company faces. In this paper we consider a normative model for a certain class of relocation processes. That is, when one location structure is gradually substituted by another one. This happens in response to external factors such as appearance of competitors or change of demand. Thus, we are facing with sequential decisions and the model and algorithm corresponding to them become endogenously dynamic. An evolutionary model for location of economic facilities is presented. Its application to an empirical case, namely changing locations of alcohol distribution stores, is briefly presented

Hybrid modelling of individual movement and collective behaviour

Mathematical models of dispersal in biological systems are often written in terms of partial differential equations (PDEs) which describe the time evolution of population-level variables (concentrations, densities). A more detailed modelling approach is given by individual-based (agent-based) models which describe the behaviour of each organism. In recent years, an intermediate modelling methodology – hybrid modelling – has been applied to a number of biological systems. These hybrid models couple an individual-based description of cells/animals with a PDEmodel of their environment. In this chapter, we overview hybrid models in the literature with the focus on the mathematical challenges of this modelling approach. The detailed analysis is presented using the example of chemotaxis, where cells move according to extracellular chemicals that can be altered by the cells themselves. In this case, individual-based models of cells are coupled with PDEs for extracellular chemical signals. Travelling waves in these hybrid models are investigated. In particular, we show that in contrary to the PDEs, hybrid chemotaxis models only develop a transient travelling wave