An analytic treatment of the Gibbs-Pareto behavior in wealth distribution

Details An analytic treatment of the Gibbs-Pareto behavior in wealth distribution An analytic treatment of the Gibbs-Pareto behavior in wealth distribution

2004-09-13

arxiv.org/abs/cond-mat/0409329v2

Physics

Condensed Matter

Statistical Mechanics

5 pages, 3 figures, accepted in Physica A

Scientific paper

10.1016/j.physa.2005.02.018

We develop a general framework, based on Boltzmann transport theory, to analyze the distribution of wealth in societies. Within this framework we derive the distribution function of wealth by using a two-party trading model for the poor people while for the rich people a new model is proposed where interaction with wealthy entities (huge reservoir) is relevant. At equilibrium, the interaction with wealthy entities gives a power-law (Pareto-like) behavior in the wealth distribution while the two-party interaction gives a Boltzmann-Gibbs distribution.

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