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Model of wealth and goods dynamics in a closed market

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  • Ausloos, Marcel
  • Pe¸kalski, Andrzej

Abstract

A simple computer simulation model of a closed market on a fixed network with free flow of goods and money is introduced. The model contains only two variables: the amount of goods and money beside the size of the system. An initially flat distribution of both variables is presupposed. We show that under completely random rules, i.e. through the choice of interacting agent pairs on the network and of the exchange rules that the market stabilizes in time and shows diversification of money and goods. We also indicate that the difference between poor and rich agents increases for small markets, as well as for systems in which money is steadily deduced from the market through taxation. It is also found that the price of goods decreases when taxes are introduced, likely due to the less availability of money.

Suggested Citation

  • Ausloos, Marcel & Pe¸kalski, Andrzej, 2007. "Model of wealth and goods dynamics in a closed market," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 373(C), pages 560-568.
  • Handle: RePEc:eee:phsmap:v:373:y:2007:i:c:p:560-568
    DOI: 10.1016/j.physa.2006.04.112
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    References listed on IDEAS

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    1. Repetowicz, Przemysław & Hutzler, Stefan & Richmond, Peter, 2005. "Dynamics of money and income distributions," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 356(2), pages 641-654.
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    7. Chatterjee, Arnab & K. Chakrabarti, Bikas & Manna, S.S, 2004. "Pareto law in a kinetic model of market with random saving propensity," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 335(1), pages 155-163.
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    9. Stéphane Hallegatte, 2006. "A Cost-Benefit Analysis of the New Orleans Flood Protection System," Post-Print hal-00164628, HAL.
    10. Ausloos, Marcel & Vandewalle, N. & Ivanova, K., 2000. "Time is money," MPRA Paper 28703, University Library of Munich, Germany.
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    14. Patriarca, Marco & Chakraborti, Anirban & Kaski, Kimmo, 2004. "Gibbs versus non-Gibbs distributions in money dynamics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 340(1), pages 334-339.
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    Citations

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    Cited by:

    1. Marcel Ausloos & Herbert Dawid & Ugo Merlone, 2014. "Spatial interactions in agent-based modeling," Papers 1405.0733, arXiv.org.
    2. Haven, Emmanuel, 2008. "Elementary Quantum Mechanical Principles and Social Science: Is There a Connection?," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 5(1), pages 41-58, March.
    3. Anirban Chakraborti & Ioane Muni Toke & Marco Patriarca & Frédéric Abergel, 2011. "Econophysics review: II. Agent-based models," Post-Print hal-00621059, HAL.
    4. Victor M. Yakovenko & J. Barkley Rosser, 2009. "Colloquium: Statistical mechanics of money, wealth, and income," Papers 0905.1518, arXiv.org, revised Dec 2009.
    5. Victor M. Yakovenko, 2007. "Econophysics, Statistical Mechanics Approach to," Papers 0709.3662, arXiv.org, revised Aug 2008.
    6. Cui, Jian & Pan, Qiuhui & Qian, Qian & He, Mingfeng & Sun, Qilin, 2013. "A multi-agent dynamic model based on different kinds of bequests," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(6), pages 1393-1397.
    7. J. R. Iglesias & R. M. C. de Almeida, 2011. "Entropy and equilibrium state of free market models," Papers 1108.5725, arXiv.org.
    8. Sebastian Guala, 2009. "Taxes in a Wealth Distribution Model by Inelastically Scattering of Particles," Interdisciplinary Description of Complex Systems - scientific journal, Croatian Interdisciplinary Society Provider Homepage: http://indecs.eu, vol. 7(1), pages 1-7.

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    Keywords

    Econophysics; Market; Exchange; Tax; Agent based model;

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