Wealth distribution under Yard–Sale exchange with proportional taxes

R. Bustos-Guajardo and Cristian F. Moukarzel ()
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R. Bustos-Guajardo: Instituto de Física “Manuel Sandoval Vallarta”, Universidad Autónoma de San Luis Potosí, Av. Manuel Nava 6, Zona Universitaria, 78290, San Luis Potosí, S. L. P., México†CINVESTAV del IPN, Departamento de Física Aplicada 97310, Mérida, Yucatán, México
Cristian F. Moukarzel: #x2020;CINVESTAV del IPN, Departamento de Física Aplicada 97310, Mérida, Yucatán, México

International Journal of Modern Physics C (IJMPC), 2016, vol. 27, issue 08, 1-8

Abstract: Recent analysis of a Yard–Sale (YS) exchange model supplemented with redistributive proportional taxation suggested an asymptotic behavior P(w)∼1∕wμ for the wealth distribution, with a parameter-dependent exponent μ. Revisiting this problem, it is here shown analytically, and confirmed by extensive numerical simulation, that the asymptotic behavior of P(w) is not power-law but rather a Gaussian. When taxation is weak, we furthermore show that a restricted-range power-law behavior appears for wealths around the mean value. The corresponding power-law exponent equals 3/2 when the return distribution has zero mean.

Keywords: Econophysics; wealth distributions; Pareto distribution; Yard–Sale exchange; taxes; agent-based modeling (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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DOI: 10.1142/S0129183116500947

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