Toward Teaching Markets as Complex Systems: A Web Based Simulation Assignment Implemented in Netlogo

This paper is based on a simulation model, programmed in NetLogo, that demonstrates changes in market structure that occur as marginal costs, demand, and barriers to entry change. Students predict and observe market structure changes in terms of number of firms, market concentration, market price and quantity, and average marginal costs, profits, and markups across the market as firms innovate. By adjusting the demand growth and barriers to entry, students can explore market changes in terms of the output variables mentioned above. The exercise allows students to synthesise information from several different chapters of the text that discuss differing market structures including perfect competition, monopoly, monopolistic competition, and oligopoly. Finally, the exercise exposes students to computational methods, simulation, and a dynamic perspective on the static models provided by the course text.