Below is section 5.5 of the textbook, by John Sterman,
See Reading Systems Diagrams for how to read the language of causal loop diagrams.
Not all markets clear through price alone. Few products are commodities for which price is the only consideration: Products and services are increasingly differentiated and companies compete to offer the best availability, delivery reliability, service, functionality, terms of payment, aftermarket support, and so on. In many markets prices do not change fast enough to equilibrate supply and demand and other competitive variables such as availability become important in clearing the market. Prices may be sluggish due to government regulation, the costs and administrative burden of frequent price changes, or considerations of fairness. For example, most people consider it unfair for hardware stores to raise the price of snow shovels after a storm, even though demand may have increased (see Kahneman, Knetsch and Thaler 1986; Thaler 1991).
|5-27 Left: Availability is an important competitive variable in many product markets, and firms regulate production in response to inverntory adequacy and delivery delay.|