In fact, in any society, most
wealth is owned by a small population. Why is it so ?
The law of distribution of wealth is known as Pareto law.There have been
several effort
to understand the origin of this law. It has been
argued that agents in market interact in
the same way as the gas particles interact in a box;
wealth/energy is neither created nor
destroyed during interaction/trading. It is only redistributed.
Corresponding distribution,
thus, is expected to be exponential (from equilibrium
theory). In fact, when income
distribution is caculated (in USA), 97% show show
this behaviour (the red curve above,
in log scale). How ever, the rich (about 3%) follow a
power law.
Chatterjee, Chakrabarti and Manna, introduce the concept of
saving into this ideal-gas like models,
where agents do not trade a fraction of their wealth for
trading. This model, where savings
propensity is random, show (numerically) scale free
distribution of wealth.
Recently I
found an exact solution this model (see ref. below). Ref :
