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A Stylized Software Model to Explore the Free Market Equality/Efficiency Tradeoff

In: Artificial Economics and Self Organization

Author

Listed:
  • Hugues Bersini

    (Université Libre de Bruxelles)

  • Nicolas Zeebroeck

    (Université Libre de Bruxelles)

Abstract

This paper provides an agent-based software exploration of the well-known free market efficiency/equality trade-off. Our study simulates the interaction of agents producing, trading and consuming goods in the presence of different market structures, and looks at how efficient the producers/consumers mapping turn out to be as well as the resulting distribution of welfare among agents at the end of an arbitrarily large number of iterations. Two market mechanisms are compared: the competitive market (a double auction market in which agents outbid each other in order to buy and sell products) and the random one (in which products are allocated randomly). Our results confirm that the superior efficiency of the competitive market (an effective and never stopping producers/consumers mapping and a superior aggregative welfare) comes at a very high price in terms of inequality (above all when severe budget constraints are in play).

Suggested Citation

  • Hugues Bersini & Nicolas Zeebroeck, 2014. "A Stylized Software Model to Explore the Free Market Equality/Efficiency Tradeoff," Lecture Notes in Economics and Mathematical Systems, in: Stephan Leitner & Friederike Wall (ed.), Artificial Economics and Self Organization, edition 127, pages 31-40, Springer.
    • Handle: RePEc:spr:lnechp:978-3-319-00912-4_3
    DOI: 10.1007/978-3-319-00912-4_3
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