Transient fluctuation of the prosperity of firms in a network economy

Yoshiharu Maeno

Physica A: Statistical Mechanics and its Applications, 2013, vol. 392, issue 16, 3351-3359

Abstract: 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 formulas 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.

Keywords: Business cluster; Network economy; Stochastic model; Supply chain; Transient fluctuation (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:392:y:2013:i:16:p:3351-3359

DOI: 10.1016/j.physa.2013.03.046

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