%0 Journal Article
%T Cobweb Model with Buffer Stock for the Stabilization of Tomato Prices in Ghana
%A Martin Anokye
%A Francis Tabi Oduro
%J Journal of Management and Sustainability
%D 2012
%I 
%R 10.5539/jms.v3n1p155
%X In this paper a linear cobweb model is developed to study the phenomenon of commodity price fluctuations and then a buffer stock incorporated into the model to stabilize the price of fresh tomatoes in Ghana. The model performed on the assumptions that fresh tomatoes have no equal substitutes, and that there is no foreign competition and also no exogenous shocks needed to generate price fluctuations. The analysis detected that the slope of the demand function of price was smaller than the slope of the supply function of price curve implying that the price and quantity supplied of the fresh tomatoes would oscillate around a fixed price and quantity and also spiral outward. The ˇ°Keep Supply at Averageˇ± (KSA) buffer scheme achieved price and quantity stability in the short run. The mean price of the scheme was GHˇé17.31, very close to actual price mean of Ghˇé 13.40 in the first 16 quarters. The standard deviation of the scheme price also dropped to 1.2 from 9.13 during price stabilization compared to 14.60 of actual price mean. In the long run the scheme price went up to Ghˇé 18.22, an increase of Ghˇé 0.91 and it is clear that in long run buffer system will fail unless the average supply is reviewed regularly. The scheme price trend equation indicated that with the implementation of the buffer scheme, the average quarterly price of fresh tomatoes increased by only 0.05.
%U http://www.ccsenet.org/journal/index.php/jms/article/view/15807