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Effects of regulation on a self-organized market

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  • Gianaurelio Cuniberti
  • Angelo Valleriani
  • Jos� Luis Vega

Abstract

Adapting a simple biological model, we study the effects of control on the market. Companies are depicted as sites on a lattice and labelled by a fitness parameter (some 'company-size' indicator). The chance of survival of a company on the market at any given time is related to its fitness, its position on the lattice and on some particular external influence, which may be considered to represent regulation from governments or central banks. The latter is rendered as a penalty for companies which show a very fast betterment in fitness space. As a result, we find that the introduction of regulation on the market contributes to lower the average fitness of companies.

Suggested Citation

  • Gianaurelio Cuniberti & Angelo Valleriani & Jos� Luis Vega, 2001. "Effects of regulation on a self-organized market," Quantitative Finance, Taylor & Francis Journals, vol. 1(3), pages 332-335, March.
    • Handle: RePEc:taf:quantf:v:1:y:2001:i:3:p:332-335
    DOI: 10.1088/1469-7688/1/3/304A
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    Cited by:

    1. Ausloos, Marcel & Clippe, Paulette & Pȩkalski, Andrzej, 2004. "Evolution of economic entities under heterogeneous political/environmental conditions within a Bak–Sneppen-like dynamics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 332(C), pages 394-402.
    2. Fraiman, Daniel, 2022. "A self-organized criticality participative pricing mechanism for selling zero-marginal cost products," Chaos, Solitons & Fractals, Elsevier, vol. 158(C).
    3. Bartolozzi, M. & Leinweber, D.B. & Thomas, A.W., 2006. "Symbiosis in the Bak–Sneppen model for biological evolution with economic applications," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 365(2), pages 499-508.
    4. Lu, Di & Du, Shuming, 2007. "Regulating economic systems in a multi-trait model of self-organized criticality," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 373(C), pages 586-592.

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