Degree Distribution of Competition-Induced Preferential Attachment Graphs

We introduce a family of one-dimensional geometric growth models, constructed iteratively by locally optimizing the tradeoffs between two competing metrics, and show that this family is equivalent to a family of preferential attachment random graph models with upper cutoffs. This is the first explanation of how preferential attachment can arise from a more basic underlying mechanism of local competition. We rigorously determine the degree distribution for the family of random graph models, showing that it obeys a power law up to a finite threshold and decays exponentially above this threshold. We also rigorously analyze a generalized version of our graph process, with two natural parameters, one corresponding to the cutoff and the other a ``fertility'' parameter. We prove that the general model has a power-law degree distribution up to a cutoff, and establish monotonicity of the power as a function of the two parameters. Limiting cases of the general model include the standard preferential attachment model without cutoff and the uniform attachment model.Comment: 24 pages, one figure. To appear in the journal: Combinatorics, Probability and Computing. Note, this is a long version, with complete proofs, of the paper "Competition-Induced Preferential Attachment" (cond-mat/0402268

Evolutionary Model of the Personal Income Distribution

The aim of this work is to establish the personal income distribution from the elementary constituents of a free market; products of a representative good and agents forming the economic network. The economy is treated as a self-organized system. Based on the idea that the dynamics of an economy is governed by slow modes, the model suggests that for short time intervals a fixed ratio of total labour income (capital income) to net income exists (Cobb-Douglas relation). Explicitly derived is Gibrat's law from an evolutionary market dynamics of short term fluctuations. The total private income distribution is shown to consist of four main parts. From capital income of private firms the income distribution contains a lognormal distribution for small and a Pareto tail for large incomes. Labour income contributes an exponential distribution. Also included is the income from a social insurance system, approximated by a Gaussian peak. The evolutionary model is able to reproduce the stylized facts of the income distribution, shown by a comparison with empirical data of a high resolution income distribution. The theory suggests that in a free market competition between products is ultimately the origin of the uneven income distribution

Preferential attachment in growing spatial networks

We obtain the degree distribution for a class of growing network models on flat and curved spaces. These models evolve by preferential attachment weighted by a function of the distance between nodes. The degree distribution of these models is similar to the one of the fitness model of Bianconi and Barabasi, with a fitness distribution dependent on the metric and the density of nodes. We show that curvature singularities in these spaces can give rise to asymptotic Bose-Einstein condensation, but transient condensation can be observed also in smooth hyperbolic spaces with strong curvature. We provide numerical results for spaces of constant curvature (sphere, flat and hyperbolic space) and we discuss the conditions for the breakdown of this approach and the critical points of the transition to distance-dominated attachment. Finally we discuss the distribution of link lengths.Comment: 9 pages, 12 figures, revtex, final versio

Evolutionary Model of the Growth and Size of Firms

The key idea of this model is that firms are the result of an evolutionary process. Based on demand and supply considerations the evolutionary model presented here derives explicitly Gibrat's law of proportionate effects as the result of the competition between products. Applying a preferential attachment mechanism for firms the theory allows to establish the size distribution of products and firms. Also established are the growth rate and price distribution of consumer goods. Taking into account the characteristic property of human activities to occur in bursts, the model allows also an explanation of the size-variance relationship of the growth rate distribution of products and firms. Further the product life cycle, the learning (experience) curve and the market size in terms of the mean number of firms that can survive in a market are derived. The model also suggests the existence of an invariant of a market as the ratio of total profit to total revenue. The relationship between a neo-classic and an evolutionary view of a market is discussed. The comparison with empirical investigations suggests that the theory is able to describe the main stylized facts concerning the size and growth of firms