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Scale-free distribution as an economic invariant: a theoretical approach

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  • Anindya S. Chakrabarti

    (Boston University)

Abstract

The presence of power laws (scale-free distributions) in widely different economic and social phenomena is well established. Here we focus on three specific cases viz. wealth distribution, firm size distribution and the city size distribution. We present a common framework to explain the origin of this feature in such seemingly unrelated contexts. It is shown that the equilibrium configurations of some general economic mechanisms are consistent with a power law in general and Zipf’s law in particular, in size distribution and it is an attractor under some conditions.

Suggested Citation

  • Anindya S. Chakrabarti, 2017. "Scale-free distribution as an economic invariant: a theoretical approach," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 12(1), pages 1-26, April.
    • Handle: RePEc:spr:jeicoo:v:12:y:2017:i:1:d:10.1007_s11403-015-0148-6
    DOI: 10.1007/s11403-015-0148-6
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    1. Gualandi, Stefano & Toscani, Giuseppe, 2019. "Size distribution of cities: A kinetic explanation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 524(C), pages 221-234.

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    More about this item

    Keywords

    Zipf’s law; City-size; Firm-size; Wealth distribution; Network structure; Stochastic processes;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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