On Trading Price Microeconomic Estimation in Monte Carlo Simulation

This paper presents an experimental analysis of trading price estimation. The main method used in this partial research is the Monte Carlo simulation. The content of the paper is related to a virtual company with trading processes. The subjects of the trade are sellers and customers applying certain negotiation strategy to gain a best price for the traded commodity. The core of the negotiation is the micro-economic price estimation. Marshallian demand function and Cobb-Douglas utility function are used to count different price values. The simulation experiments should be used to support the idea that with the extension of common management information systems using a simulation method, some perspective decision support systems could be created. Their aim is to exploit the simulation to predict some Key Performance Indicators of the companies (income, profit, costs, turnover, cash flow etc.). We introduce the formal model, simulation methodology, and we depict some of the simulation results. Furthermore, we give a narrow view to the Monte Carlo simulation implementation in MATLAB. The conclusion sections will also provide a discussion of simulation results and suggest the ways in which the abovementioned concept might be applied.