A Concept to Approach Demand and Supply in a Different Way

Kanish Sogani

The purpose of writing this research paper is to investigate the applications, limitations and benefits of demand and supply framework. Antoine Augustin discovered the economic model of demand and supply in 1838. His model works on the fundamental laws of demand and supply. Today many government policies and private firm decisions are taken after constructing and analyzing the demand and supply of their niche. However, the model is too simplistic and the applications of demand and supply shown by this framework is to an extent bend towards theoretical use then practical gains. In this ever-changing world, where business are becoming adaptively creative and the everyday market is becoming unpredictable, I believe that relying on a model which is centuries old  may not help the upcoming business to grow and evolve. During 1800s, trading use to occur in a uniform manner and different markets use to grow in a linear, passive fashion. In this current era, demand is completely unpredictable because of the high competition and available substitutes. I believe every business toady have the power of some price discrimination or else a business will start losing the potential customers and may soon shut down. Prices today play a very small role in the process of trading, and that there are many factors other than price which determines the level of demand at a particular time period. These other factor play a big role in setting the equilibrium prices. For different situations, different prices will have to be charged by a business to keep the demand up to a level of supply. 

In this paper, I will demonstrate a way to view how does the practical world works in different equilibriums and situations by constructing a new model. In order to depict a practical market, ceteris paribus will have to be eliminated. Equilibrium in this new framework will be reached with not keeping things constant but with the factors, that influences price.

The new framework will be critically analyzed, evaluated and be compared with the existing economic models. The new framework will be an improvement to the existing economic models, as it will demonstrate different those concepts, which are not portrayed by the existing model such as the concept of market gap.

If I am able to prove my framework by providing concrete limitations of the existing demand and supply model and how are the old models limited to only theoretical use, I can then conclude by providing significant benefits to relying on the new theory. The aim of this report is to find a unique alternative of demand and supply, which will be more accurate and reliable in the real life scenarios.