1 research outputs found
Entropy and equilibrium state of free market models
Many recent models of trade dynamics use the simple idea of wealth exchanges
among economic agents in order to obtain a stable or equilibrium distribution
of wealth among the agents. In particular, a plain analogy compares the wealth
in a society with the energy in a physical system, and the trade between agents
to the energy exchange between molecules during collisions. In physical
systems, the energy exchange among molecules leads to a state of equipartition
of the energy and to an equilibrium situation where the entropy is a maximum.
On the other hand, in the majority of exchange models, the system converges to
a very unequal condensed state, where one or a few agents concentrate all the
wealth of the society while the wide majority of agents shares zero or almost
zero fraction of the wealth. So, in those economic systems a minimum entropy
state is attained. We propose here an analytical model where we investigate the
effects of a particular class of economic exchanges that minimize the entropy.
By solving the model we discuss the conditions that can drive the system to a
state of minimum entropy, as well as the mechanisms to recover a kind of
equipartition of wealth