Featured Research

from universities, journals, and other organizations

Market exchange rules responsible for wealth concentration, physicists say

Date:
March 7, 2012
Source:
Springer
Summary:
Physicists have shown that wealth concentration invariably stems from a particular type of market exchange rules -- where agents cannot receive more income than their own capital. The authors concluded that maximum inequalities ensue from free markets, which are governed by such seemingly fair rules.

Two Brazilian physicists have shown that wealth concentration invariably stems from a particular type of market exchange rules -- where agents cannot receive more income than their own capital. The authors concluded that maximum inequalities ensue from free markets, which are governed by such seemingly fair rules.

Related Articles


This study, published in European Physical Journal B, was conducted by J. Roberto Iglesias and Rita de Almeida from the Brazilian National Institute of Science and Technology of Complex Systems, based in Porto Alegre. This Brazilian city is famous for hosting the World Social Forum, which is designed to find alternatives to economic liberalism.

To study free market models, the authors used statistical mechanics methods focusing on the dynamic of wealth exchange over time. These methods were inspired by Boltzmann's theory of kinetic energy exchange between gas molecules during collisions. They found that over time, all the available wealth is concentrated among only a few agents. This is represented by a tail-shaped graph that confirms previous studies showing that wealth distribution follows a power law.

As a result, the free market is stalled with no subsequent possible exchanges of wealth, even if wealth were distributed evenly from the start. The authors concluded that regulations for the rules of wealth exchange are necessary to avoid concentration of wealth and stalling of market exchange. For example, systems in which regulations and taxes give the poorest agent a probability of wealth gain of over 50 percent may prevent wealth concentration and decrease inequalities.

Also, the possibility of gains exceeding their own capital is crucial to permit a recovery of the poorer agents and to circumvent market stagnancy. Although such models analyse only an incomplete representation of the market and trade, further research could contribute to defining exchange rules that may help avoid future wealth concentration.


Story Source:

The above story is based on materials provided by Springer. Note: Materials may be edited for content and length.


Journal Reference:

  1. J. R. Iglesias, R. M. C. Almeida. Entropy and equilibrium state of free market models. The European Physical Journal B, 2012; 85 (3) DOI: 10.1140/epjb/e2012-21036-1

Cite This Page:

Springer. "Market exchange rules responsible for wealth concentration, physicists say." ScienceDaily. ScienceDaily, 7 March 2012. <www.sciencedaily.com/releases/2012/03/120307112614.htm>.
Springer. (2012, March 7). Market exchange rules responsible for wealth concentration, physicists say. ScienceDaily. Retrieved October 23, 2014 from www.sciencedaily.com/releases/2012/03/120307112614.htm
Springer. "Market exchange rules responsible for wealth concentration, physicists say." ScienceDaily. www.sciencedaily.com/releases/2012/03/120307112614.htm (accessed October 23, 2014).

Share This



More Computers & Math News

Thursday, October 23, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Chameleon Camouflage to Give Tanks Cloaking Capabilities

Chameleon Camouflage to Give Tanks Cloaking Capabilities

Reuters - Innovations Video Online (Oct. 22, 2014) — Inspired by the way a chameleon changes its colour to disguise itself; scientists in Poland want to replace traditional camouflage paint with thousands of electrochromic plates that will continuously change colour to blend with its surroundings. The first PL-01 concept tank prototype will be tested within a few years, with scientists predicting that a similar technology could even be woven into the fabric of a soldiers' clothing making them virtually invisible to the naked eye. Matthew Stock reports. Video provided by Reuters
Powered by NewsLook.com
Internet of Things Aims to Smarten Your Life

Internet of Things Aims to Smarten Your Life

AP (Oct. 22, 2014) — As more and more Bluetooth-enabled devices are reaching consumers, developers are busy connecting them together as part of the Internet of Things. (Oct. 22) Video provided by AP
Powered by NewsLook.com
Google's Inbox Is The Latest Gmail Competitor

Google's Inbox Is The Latest Gmail Competitor

Newsy (Oct. 22, 2014) — Google's new e-mail app is meant for greater personalization and allows users to better categorize their mail, but Gmail isn't going away just yet. Video provided by Newsy
Powered by NewsLook.com
Free Math App Is A Teacher's Worst Nightmare

Free Math App Is A Teacher's Worst Nightmare

Newsy (Oct. 22, 2014) — New photo-recognition software from MicroBlink, called PhotoMath, solves linear equations and simple math problems with step-by-step results. Video provided by Newsy
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
 
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:  

Breaking News:

Strange & Offbeat Stories

 

Space & Time

Matter & Energy

Computers & Math

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:  

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile iPhone Android Web
Follow Facebook Twitter Google+
Subscribe RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins