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Statistical properties of agent-based market area model

  • Zoltan Kuscsik
  • Denis Horvath
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    One dimensional stylized model taking into account spatial activity of firms with uniformly distributed customers is proposed. The spatial selling area of each firm is defined by a short interval cut out from selling space (large interval). In this representation, the firm size is directly associated with the size of its selling interval. The recursive synchronous dynamics of economic evolution is discussed where the growth rate is proportional to the firm size incremented by the term including the overlap of the selling area with areas of competing firms. Other words, the overlap of selling areas inherently generate a negative feedback originated from the pattern of demand. Numerical simulations focused on the obtaining of the firm size distributions uncovered that the range of free parameters where the Pareto's law holds corresponds to the range for which the pair correlation between the nearest neighbor firms attains its minimum.

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    Paper provided by in its series Papers with number 0710.0459.

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    Date of creation: Oct 2007
    Date of revision:
    Handle: RePEc:arx:papers:0710.0459
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    7. Rawlings, Philip K. & Reguera, David & Reiss, Howard, 2004. "Entropic basis of the Pareto law," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 343(C), pages 643-652.
    8. Bouchaud, Jean-Philippe & Mézard, Marc, 2000. "Wealth condensation in a simple model of economy," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 282(3), pages 536-545.
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    10. White, Lawrence J., 1975. "The spatial distribution of retail firms in an urban setting," Regional Science and Urban Economics, Elsevier, vol. 5(3), pages 325-333, August.
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