Searching for the physical origin of bifurcations in non-equilibrium economy

The economy is never in equilibrium despite the fact that most of the studies is focused on equilibrium economy. The nonequilibrium economy shows abrupt changes such as bifurcation and catastrophe from time to time in the examples of financial market breakdown and economic crisis in recent years. In this study, we explore the physical origin of the bifurcation and catastrophe of the non-equilibrium economic systems based on our landscape and flux theory. From the underlying nonlinear supply-demand dynamics, both the bistability and limit cycle oscillations can appear. The transformation or bifurcation from bi-stability to limit cycle oscillation or vice versa can occur upon changing the slope of demand curve. The transformation of bifurcation of the monostable state of monopoly or competition to either the bistability of monopoly and competition or coherent limit cycle oscillation between monopoly and competition can appear upon parallel shifting the demand curve. We show that the average flux of the driving force can provide a dynamical origin for the bifurcation/catastrophe of the nonequilibrium economy while the dissipation cost characterized by the entropy production rate can provide a thermodynamic origin for the bifurcation/catastrophe of the nonequilibrium economy. The average flux and dissipation cost can then be used as indicators of critical points for the emergence of bifurcation and catastrophe. These quantitative measures may be used to predict crisis and catastrophe in the non-equilibrium economic system. Graphic abstract