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Spontaneous centralization of control in a network of company ownerships

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  • Sebastian M. Krause
  • Tiago P. Peixoto
  • Stefan Bornholdt

Abstract

We introduce a model for the adaptive evolution of a network of company ownerships. In a recent work it has been shown that the empirical global network of corporate control is marked by a central, tightly connected "core" made of a small number of large companies which control a significant part of the global economy. Here we show how a simple, adaptive "rich get richer" dynamics can account for this characteristic, which incorporates the increased buying power of more influential companies, and in turn results in even higher control. We conclude that this kind of centralized structure can emerge without it being an explicit goal of these companies, or as a result of a well-organized strategy.

Suggested Citation

  • Sebastian M. Krause & Tiago P. Peixoto & Stefan Bornholdt, 2013. "Spontaneous centralization of control in a network of company ownerships," Papers 1306.3422, arXiv.org.
    • Handle: RePEc:arx:papers:1306.3422
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    File URL: http://arxiv.org/pdf/1306.3422
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