The Dynamic Model of Market Inequality
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Robin Maialeh: University of Economics
Chapter Chapter 7 in Dynamic Models and Inequality, 2020, pp 147-174 from Springer
Abstract The aim of the last chapter is to extract and aggregate knowledge from the previous chapters and to formulate a simple model that captures principles of market resource allocation. The model should come with an explicative principle of market inequality in economic distribution for which it abstracts to the utmost from agent’s subjectivity, randomness and idiosyncrasies. Therefore, we assume homogeneous agents in order to eliminate individual differences as the determinant of inequality. This assumption secures that inequality detected among agents with the same decision-making process stems from the system characteristics of the production process which is based on the market mechanism. Beside the market-isolating effect, it is necessary to understand that the proposed model concerns abstract principles of the market mechanism which enables to consider not only typical microeconomic actors (firms and households/individuals), but also national states and other geographical or political entities organized by a market system.
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