Advanced Search
MyIDEAS: Login to save this paper or follow this series

How simple regulations can greatly reduce inequality

Contents:

Author Info

  • J. R. Iglesias
Registered author(s):

    Abstract

    Many models of market dynamics make use of the idea of wealth exchanges among economic agents. A simple analogy compares the wealth in a society with the energy in a physical system, and the trade between agents to the energy exchange between molecules during collisions. However, while in physical systems the equipartition of energy is valid, in most exchange models for economic markets the system converges to a very unequal "condensed" state, where one or a few agents concentrate all the wealth of the society and the wide majority of agents shares zero or a very tiny fraction of the wealth. Here we present an exchange model where the goal is not only to avoid condensation but also to reduce the inequality; to carry out this objective the choice of interacting agents is not at random, but follows an extremal dynamics regulated by the wealth of the agent. The wealth of the agent with the minimum capital is changed at random and the difference between the ancient and the new wealth of this poorest agent is taken from other agents, so establishing a regulatory tool for wealth redistribution. We compare different redistribution processes and conclude that a drastic reduction of the inequality can be obtained with very simple regulations.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://arxiv.org/pdf/1007.0461
    File Function: Latest version
    Download Restriction: no

    Bibliographic Info

    Paper provided by arXiv.org in its series Papers with number 1007.0461.

    as in new window
    Length:
    Date of creation: Jul 2010
    Date of revision: Jul 2010
    Handle: RePEc:arx:papers:1007.0461

    Contact details of provider:
    Web page: http://arxiv.org/

    Related research

    Keywords:

    This paper has been announced in the following NEP Reports:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. J. R. Iglesias & R. M. C. de Almeida, 2011. "Entropy and equilibrium state of free market models," Papers 1108.5725, arXiv.org.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:arx:papers:1007.0461. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (arXiv administrators).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.