An analytic treatment of the Gibbs–Pareto behavior in wealth distribution

Arnab Das and Sudhakar Yarlagadda

Physica A: Statistical Mechanics and its Applications, 2005, vol. 353, issue C, 529-538

Abstract: We develop a general framework, based on Boltzmann transport theory, to analyze the distribution of wealth in societies. Within this framework we derive the distribution function of wealth by using a two-party trading model for the poor people, while for the rich people a new model is proposed, where interaction with wealthy entities (huge reservoir) is relevant. At equilibrium, the interaction with wealthy entities gives a power-law (Pareto-like) behavior in the wealth distribution, while the two-party interaction gives a Boltzmann–Gibbs distribution.

Keywords: Econophysics; Wealth distribution; Pareto law; Boltzmann–Gibbs distribution (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:353:y:2005:i:c:p:529-538

DOI: 10.1016/j.physa.2005.02.018

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