Thursday, December 30, 2010

Why not a simple queuing model

We suppose three channels flowing apples, oranges and wages. Think of apple farms, apple whosellers and apple retailers, for example. When the channel for apples is coherent with the channel for wages, and the orange channel less coherent to wages; then the line to trade wages for apples is shorter than the line to trade wages for oranges.  Define coherency as the mis-alignment of the apple quant arrival and the wage quant arrival.

This model is equivalent to  Nick Rowe's substitution effects.

With the channel model, we consider a channel at maximum entropy to match desire or demand, so we can actually eliminate the supply/demand charts all together.

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