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Money in Gas-Like Markets: Gibbs and Pareto Laws
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We consider the ideal-gas models of trading markets, where each agent is identified with a gas molecule and each trading as an elastic or money-conserving (two-body) collision. Unlike in the ideal gas, we introduce saving propensity $λ$ of agents, such that each agent saves a fraction $λ$ of its money and trades with the rest. We show the steady-state money or wealth distribution in a market is Gibbs-like for $λ=0$, has got a non-vanishing most-probable value for $λ\ne 0$ and Pareto-like when $λ$ is widely distributed among the agents. We compare these results with observations on wealth distributions of various countries.
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“However, these models do not help with the implementation of controls over the wealth distribution dynamics in a closed economy setting since they primarily focus on the equilibria states of microeconomic systems.”
From Decentralized token economy theory (DeTEcT): token pricing, stability and governance for token economies (2023) · cites this paper as Chatterjee et al., 2003
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Metadata
- Authors
- Chatterjee, A., Chakrabarti, B. K., & Manna, S.
- Affiliations
- Saha Institute of Nuclear Physics (IN)
- Venue
- Physica Scripta
- Publisher
- IOP Publishing
- Published
- 2003
- Volume
- T106
- Issue
- 1
- Pages
- 36
- ISSN
- 0031-8949 (ISSN-L)
- OpenAlex
- W2080953961
- Cited by
- 88
- References
- 1
- Citations by year
- 2026: 2 · 2025: 2 · 2024: 5 · 2023: 4 · 2022: 2 · 2021: 1 · 2020: 2 · 2019: 1 · 2018: 1 · 2017: 1 · 2016: 1 · 2015: 3 · 2013: 1 · 2012: 3
- FWCI
- 24.23
- Type
- journal article
- Language
- en
- Open access
- green
- arxiv.org
- Locations
- Physica Scripta (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- arXiv (Cornell University) (submittedVersion)
- arXiv (Cornell University)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Complex Systems and Time Series Analysis
- Physical Sciences › Physics and Astronomy › Statistical and Nonlinear Physics › Statistical Mechanics and Entropy
- Social Sciences › Sociology and Political Science › Income, Poverty, and Inequality
- Keywords
- ideal gas model, saving propensity, wealth distribution, Boltzmann distribution, Pareto distribution, agent-based modeling, market microstructure
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