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The Impacts of Information-Sharing Mechanisms on Spatial Market Formation Based on Agent-Based Modeling

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  • Qianqian Li
  • Tao Yang
  • Erbo Zhao
  • Xing’ang Xia
  • Zhangang Han

Abstract

There has been an increasing interest in the geographic aspects of economic development, exemplified by P. Krugman’s logical analysis. We show in this paper that the geographic aspects of economic development can be modeled using multi-agent systems that incorporate multiple underlying factors. The extent of information sharing is assumed to be a driving force that leads to economic geographic heterogeneity across locations without geographic advantages or disadvantages. We propose an agent-based market model that considers a spectrum of different information-sharing mechanisms: no information sharing, information sharing among friends and pheromone-like information sharing. Finally, we build a unified model that accommodates all three of these information-sharing mechanisms based on the number of friends who can share information. We find that the no information-sharing model does not yield large economic zones, and more information sharing can give rise to a power-law distribution of market size that corresponds to the stylized fact of city size and firm size distributions. The simulations show that this model is robust. This paper provides an alternative approach to studying economic geographic development, and this model could be used as a test bed to validate the detailed assumptions that regulate real economic agglomeration.

Suggested Citation

  • Qianqian Li & Tao Yang & Erbo Zhao & Xing’ang Xia & Zhangang Han, 2013. "The Impacts of Information-Sharing Mechanisms on Spatial Market Formation Based on Agent-Based Modeling," PLOS ONE, Public Library of Science, vol. 8(3), pages 1-12, March.
  • Handle: RePEc:plo:pone00:0058270
    DOI: 10.1371/journal.pone.0058270
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    Cited by:

    1. Justin Delloye & Dominique Peeters & Isabelle Thomas, 2015. "On the Morphology of a Growing City: A Heuristic Experiment Merging Static Economics with Dynamic Geography," PLOS ONE, Public Library of Science, vol. 10(8), pages 1-17, August.
    2. Yuan, Guanghui & Han, Jingti & Zhou, Lei & Liang, Hejun & Zhang, Yicheng, 2019. "Supply and demand law under variable information," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 536(C).

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