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Wealth distribution under Yard–Sale exchange with proportional taxes

Author

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  • R. Bustos-Guajardo

    (Instituto de Física “Manuel Sandoval Vallarta”, Universidad Autónoma de San Luis Potosí, Av. Manuel Nava 6, Zona Universitaria, 78290, San Luis Potosí, S. L. P., México†CINVESTAV del IPN, Departamento de Física Aplicada 97310, Mérida, Yucatán, México)

  • Cristian F. Moukarzel

    (#x2020;CINVESTAV del IPN, Departamento de Física Aplicada 97310, Mérida, Yucatán, México)

Abstract

Recent analysis of a Yard–Sale (YS) exchange model supplemented with redistributive proportional taxation suggested an asymptotic behavior P(w)∼1∕wμ for the wealth distribution, with a parameter-dependent exponent μ. Revisiting this problem, it is here shown analytically, and confirmed by extensive numerical simulation, that the asymptotic behavior of P(w) is not power-law but rather a Gaussian. When taxation is weak, we furthermore show that a restricted-range power-law behavior appears for wealths around the mean value. The corresponding power-law exponent equals 3/2 when the return distribution has zero mean.

Suggested Citation

  • R. Bustos-Guajardo & Cristian F. Moukarzel, 2016. "Wealth distribution under Yard–Sale exchange with proportional taxes," International Journal of Modern Physics C (IJMPC), World Scientific Publishing Co. Pte. Ltd., vol. 27(08), pages 1-8, August.
    • Handle: RePEc:wsi:ijmpcx:v:27:y:2016:i:08:n:s0129183116500947
    DOI: 10.1142/S0129183116500947
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    Cited by:

    1. Boghosian, Bruce M. & Devitt-Lee, Adrian & Johnson, Merek & Li, Jie & Marcq, Jeremy A. & Wang, Hongyan, 2017. "Oligarchy as a phase transition: The effect of wealth-attained advantage in a Fokker–Planck description of asset exchange," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 476(C), pages 15-37.

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