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Generic features of the wealth distribution in ideal-gas-like markets

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  • P. K. Mohanty

Abstract

We provide an exact solution to the ideal-gas-like models studied in econophysics to understand the microscopic origin of Pareto-law. In these class of models the key ingredient necessary for having a self-organized scale-free steady-state distribution is the trading or collision rule where agents or particles save a definite fraction of their wealth or energy and invests the rest for trading. Using a Gibbs ensemble approach we could obtain the exact distribution of wealth in this model. Moreover we show that in this model (a) good savers are always rich and (b) every agent poor or rich invests the same amount for trading. Nonlinear trading rules could alter the generic scenario observed here.

Suggested Citation

  • P. K. Mohanty, 2006. "Generic features of the wealth distribution in ideal-gas-like markets," Papers physics/0603141, arXiv.org, revised Jul 2006.
    • Handle: RePEc:arx:papers:physics/0603141
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    Cited by:

    1. Rashkovskiy, Sergey A., 2019. "‘Bosons’ and ‘fermions’ in social and economic systems," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 514(C), pages 90-104.
    2. Chakrabarti, Anindya S., 2011. "An almost linear stochastic map related to the particle system models of social sciences," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 390(23), pages 4370-4378.
    3. Lima, Hugo & Vieira, Allan R. & Anteneodo, Celia, 2022. "Nonlinear redistribution of wealth from a stochastic approach," Chaos, Solitons & Fractals, Elsevier, vol. 163(C).
    4. Anindya S. Chakrabarti, 2017. "Scale-free distribution as an economic invariant: a theoretical approach," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 12(1), pages 1-26, April.
    5. Sergey A. Rashkovskiy, 2018. "'Bosons' and 'fermions' in social and economic systems," Papers 1805.05327, arXiv.org.
    6. Düring, Bertram & Matthes, Daniel & Toscani, Giuseppe, 2008. "A Boltzmann-type approach to the formation of wealth distribution curves," CoFE Discussion Papers 08/05, University of Konstanz, Center of Finance and Econometrics (CoFE).
    7. Anirban Chakraborti & Ioane Muni Toke & Marco Patriarca & Frédéric Abergel, 2011. "Econophysics review: II. Agent-based models," Post-Print hal-00621059, HAL.
    8. Chakrabarti, Anindya S. & Chakrabarti, Bikas K., 2010. "Statistical theories of income and wealth distribution," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 4, pages 1-31.
    9. Anindya S. Chakrabarti, 2011. "Firm dynamics in a closed, conserved economy: A model of size distribution of employment and related statistics," Papers 1112.2168, arXiv.org.
    10. Victor M. Yakovenko & J. Barkley Rosser, 2009. "Colloquium: Statistical mechanics of money, wealth, and income," Papers 0905.1518, arXiv.org, revised Dec 2009.

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