Wealth Condensation in Pareto Macro-Economies

Details Wealth Condensation in Pareto Macro-Economies Wealth Condensation in Pareto Macro-Economies

2001-01-05

arxiv.org/abs/cond-mat/0101068v1

Phys.Rev.E65.026102,2002

Physics

Condensed Matter

Statistical Mechanics

4 pages, 1 figure

Scientific paper

10.1103/PhysRevE.65.026102

We discuss a Pareto macro-economy (a) in a closed system with fixed total wealth and (b) in an open system with average mean wealth and compare our results to a similar analysis in a super-open system (c) with unbounded wealth. Wealth condensation takes place in the social phase for closed and open economies, while it occurs in the liberal phase for super-open economies. In the first two cases, the condensation is related to a mechanism known from the balls-in-boxes model, while in the last case to the non-integrable tails of the Pareto distribution. For a closed macro-economy in the social phase, we point to the emergence of a ``corruption'' phenomenon: a sizeable fraction of the total wealth is always amassed by a single individual.

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