1 research outputs found
Transient fluctuation of the prosperity of firms in a network economy
The transient fluctuation of the prosperity of firms in a network economy is
investigated with an abstract stochastic model. The model describes the profit
which firms make when they sell materials to a firm which produces a product
and the fixed cost expense to the firms to produce those materials and product.
The formulae for this model are parallel to those for population dynamics. The
swinging changes in the fluctuation in the transient state from the initial
growth to the final steady state are the consequence of a topology-dependent
time trial competition between the profitable interactions and expense. The
firm in a sparse random network economy is more likely to go bankrupt than
expected from the value of the limit of the fluctuation in the steady state,
and there is a risk of failing to reach by far the less fluctuating steady
state