Simulation models

Abstract

This paper summarizes some basic assumptions and procedures for simulation approaches. A brief discussion of system dynamics is presented. A description of the International Petroleum Exchange Model (IPE) developed at MIT is presented. As a simulation model of the world oil market, IPE shows the interactions, adjustments, and behavior of major actors and agents, and of the underlying supply, demand, and price relationships. Illustrations of model results are presented along with comparison of alternative simulation scenarios.