# Finite market size as a source of extreme wealth inequality and market instability

## Author Info

• Zhi-Feng Huang
• Sorin Solomon

## Abstract

We study the finite-size effects in some scaling systems, and show that the finite number of agents N leads to a cut-off in the upper value of the Pareto law for the relative individual wealth. The exponent $\alpha$ of the Pareto law obtained in stochastic multiplicative market models is crucially affected by the fact that N is always finite in real systems. We show that any finite value of N leads to properties which can differ crucially from the naive theoretical results obtained by assuming an infinite N. In particular, finite N may cause in the absence of an appropriate social policy extreme wealth inequality \$\alpha

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File URL: http://arxiv.org/pdf/cond-mat/0103170

## Bibliographic Info

Paper provided by arXiv.org in its series Papers with number cond-mat/0103170.

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 Length: Date of creation: Mar 2001 Date of revision: Publication status: Published in Physica A 294, 503-513 (2001) Handle: RePEc:arx:papers:cond-mat/0103170 Contact details of provider: Web page: http://arxiv.org/

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