Introduction
The traditional analysis of price determination in competitive markets is done at a microeconomic level through the supply and demand model. This model requires some modification before we can use it to understand real world markets. Making these modifications, and justifying them, is the subject of this lecture.
Click the link below to download slides, handouts, and links to further reading.
Slides
Handout and Exercises
lecture notes for ec4024 lectures5and6
Further Reading
MFM Osborne, Financial Analogs of Physical Brownian Motion
"The Stock Market and Finance From a Physicist's Viewpoint" (M. F. Osborne)
V. M. Yakovenko, "Econophysics, Statistical Mechanics Approach to", a review article for Springer Encyclopedia of Complexity and System Science [arXiv:0709.3662]