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Abstract

The article by Carvalho (1995, this issue) advocates the use of a stochastic demand simulator based on the use of the gamma probability distribution. He argues that this simulator is an improvement over existing demand models because it is consistent with the theoretical properties of demand and is considerably more flexible than those currently available. Our critique focuses on four major points: (a) Carvalho's assumptions are too restrictive, (b) the parameters of the Carvalho model are difficult to set and thus lack flexibility in classroom use, (c) the demand function may be unstable when used in a dynamic simulation environment, and (d) the model does not have the unique property of independence between consumers and suppliers claimed by the author

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computerized business simulation demand modeling demand simulator economic theory law of demand

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References

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Carvalho, G. (1995). Modeling the law of demand in business simulators. Simulation & Gaming: An International Journal, 26 (1).

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The Use of the Gamma Probability Distribution: A Critique of Carvalho's Demand Simulator

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