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Power Accumulation and Endogenous Inequality: A Mean Field Game Approach to Elite Dominance

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  • Heng-fu Zou

Abstract

This paper develops a dynamic model of power accumulation and inequality using the framework of mean field games. Agents optimize intertemporally over consumption while accumulating power as a capital stock, subject to idiosyncratic productivity shocks. Power yields direct utility and enhances future accumulation. In equilibrium, the joint distribution of power and productivity evolves endogenously via a coupled Hamilton-Jacobi-Bellman and Fokker-Planck system. We prove that - even absent initial heterogeneity-persistent inequality and elite dominance emerge as stable outcomes. The stationary distribution exhibits fat tails and high Gini coefficients, consistent with empirical observations of power concentration in historical empires and modern regimes. The model offers a structural explanation for the recurrent emergence of dominant elites under decentralized, rational decision-making.

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  • Heng-fu Zou, 2025. "Power Accumulation and Endogenous Inequality: A Mean Field Game Approach to Elite Dominance," CEMA Working Papers 759, China Economics and Management Academy, Central University of Finance and Economics.
    • Handle: RePEc:cuf:wpaper:759
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    References listed on IDEAS

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    1. Heng-Fu Zou, 1997. "Dynamic analysis in the Viner model of mercantilism," Journal of International Money and Finance, Elsevier, vol. 16(4), pages 637-651, August.
    2. Powell, Robert, 2006. "War as a Commitment Problem," International Organization, Cambridge University Press, vol. 60(1), pages 169-203, January.
    3. Gong, Liutang & Zou, Heng-fu, 2003. "Military spending and stochastic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 28(1), pages 153-170, October.
    4. Zou, Heng-fu, 1995. "A dynamic model of capital and arms accumulation," Journal of Economic Dynamics and Control, Elsevier, vol. 19(1-2), pages 371-393.
    5. Fearon, James D., 1995. "Rationalist explanations for war," International Organization, Cambridge University Press, vol. 49(3), pages 379-414, July.
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