Wealth Condensation in Pareto Macro-Economies

Z. Burda, D. Johnston, J. Jurkiewicz, M. Kaminski, M. A. Nowak, G. Papp and I. Zahed

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Abstract: We discuss a Pareto macro-economy (a) in a closed system with fixed total wealth and (b) in an open system with average mean wealth and compare our results to a similar analysis in a super-open system (c) with unbounded wealth. Wealth condensation takes place in the social phase for closed and open economies, while it occurs in the liberal phase for super-open economies. In the first two cases, the condensation is related to a mechanism known from the balls-in-boxes model, while in the last case to the non-integrable tails of the Pareto distribution. For a closed macro-economy in the social phase, we point to the emergence of a ``corruption'' phenomenon: a sizeable fraction of the total wealth is always amassed by a single individual.

Date: 2001-01
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Published in Phys.Rev.E65.026102,2002

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