Towards the Simulation of Agricultural Commodity Price Dynamics in Traditional Markets with Agent-Based Modelling

Abstract

Given the complex interplay of economic, cultural, and environmental factors in traditional markets, understanding the determinants of good prices requires a nuanced approach. This study aims to dissect these interactions within Indonesia’s chili market using agent-based modeling and simulation. Following a comprehensive literature review, this study delineates the selection of agents and exogenous factors critical for modeling chili prices. Literature reviews were conducted on four domains of the Scopus library and the local database: agent-based agricultural supply chain models, agent-based price models, traditional market price volatility, and Indonesian chili price volatility. Agents and exogenous factors identified in Indonesian chili price studies were used to eliminate agent and exogenous factor candidates from the other three domains. Of the 20 agent classes extracted from the literature, only seven were defined for the chili price model. The ultimate classes are producers, suppliers (for fertilizer), retailers, middlemen/intermediaries (middle buyers), negotiation agents (‘real’ middlemen), RPOs, and consumers. Economic conditions, cultural practices, geographical location, environmental conditions, and historical events are identified as exogenous factors in the price model.

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