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Regulating economic systems in a multi-trait model of self-organized criticality

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  • Lu, Di
  • Du, Shuming

Abstract

We study the effect of size-based regulation on an economic system. A multiple-trait model of self-organized criticality is used to simulate the economic system. The major difference of this work from previous studies is that firm's fitness is not characterized by a single number but by M traits. Each trait represents one aspect of the competitiveness of the firm, and firm's size is one of these traits. Major finding drawn from the present study is that the effectiveness of regulations decreases with increasing M, i.e., size-based regulations are less effective when the overall fitness of a firm is determined by more factors.

Suggested Citation

  • Lu, Di & Du, Shuming, 2007. "Regulating economic systems in a multi-trait model of self-organized criticality," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 373(C), pages 586-592.
    • Handle: RePEc:eee:phsmap:v:373:y:2007:i:c:p:586-592
    DOI: 10.1016/j.physa.2006.04.122
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    References listed on IDEAS

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    3. Scheinkman, Jose A & Woodford, Michael, 1994. "Self-Organized Criticality and Economic Fluctuations," American Economic Review, American Economic Association, vol. 84(2), pages 417-421, May.
    4. Takuya Yamano, 2001. "Regulation Effects On Market With Bak–Sneppen Model In High Dimensions," International Journal of Modern Physics C (IJMPC), World Scientific Publishing Co. Pte. Ltd., vol. 12(09), pages 1329-1333.
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