A Technique for Generating Supply and Demand Curves from System Dynamics Models

We present a technique for generating supply and demand curves from system dynamics (SD) simulations that dynamically capture the concepts of supply and demand, but do not explicitly contain supply/demand data curves. These curves can be constructed for one or many time periods in a given SD model, with the latter showing the time-variant evolution of these microeconomic concepts. Such supply and demand curves have value in that modelers can (i) use them to communicate SD simulation results in commonly-employed microeconomic terms, (ii) calculate important microeconomic metrics such as price elasticities of demand/supply, (iii) transfer them into other, non-SD models or simulations that require such curves as input, and (iv) better understand the interrelationships and latencies between supply and demand. The technique uses dummy prices or quantities as inputs that deviate from the actual prices or quantities in the SD model, and then the model computes the hypothetical quantities or prices, respectively, for consumption or production at the dummy price or quantity.