Investment/taxation model: Investors in groups

P.M.C. de Oliveira

Physica A: Statistical Mechanics and its Applications, 2020, vol. 537, issue C

Abstract: Individuals invest their capital and/or working skills, multiplying their wealths. This process is modeled by grouping investors according to different network possibilities. They also pay taxes according to progressive tax rates (increasing for increasing wealths) or regressive (the contrary). Independent of the particular rule of investment, there is a dynamically induced transition where all the population wealth falls in hands of a single individual for regressive taxation. In this case, the economic evolution is extinct. On the other hand, for progressive taxation the economic evolution continues forever. The critical properties of this transition, however, depend on the geometric arrangement adopted for investments. Here, the transition is studied in different spatial dimensions. For regular lattices a dimension universality is found, where the critical properties depend only on the lattice dimension.

Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:537:y:2020:i:c:s0378437119314815

DOI: 10.1016/j.physa.2019.122588

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