Regensburg 2013 – scientific programme

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SOE: Fachverband Physik sozio-ökonomischer Systeme

SOE 4: Economic Growth and Longevity I

SOE 4.2: Talk

Monday, March 11, 2013, 11:45–12:00, H37

Condensation of wealth and control in a network of firms — •Sebastian M. Krause, Tiago P. Peixoto, and Stefan Bornholdt — Institut für Theoretische Physik, Universität Bremen, Hochschulring 18, D-28359 Bremen

A recent analysis of the global network of corporate control found a strongly-connected core of about 1300 large firms controlling up to 80% of the world economy [1]. An interesting question concerning this effect of control concentration is whether it arises due to purposeful strategies, or it is simply a byproduct of simple organization rules.

Here we show that a non-growth rich-get-richer phenomenon in a toy model of wealth flows suffices to forecast a strongly-connected core of rich firms controlling the rest of the system. We find that the distribution of wealth resulting from this dynamics is very broad, even if the substrate graph is random. The wealth distribution, together with the core-periphery structure arises out of a symmetry-breaking process, and is not unique for the same graph. The model has a single parameter controlling the overall relative profit due to dividends which, if increased, results in a broader wealth distribution and smaller controlling core of firms.

[1] S. Vitali, J. B. Glattfelder, and S. Battiston, The Network of Global Corporate Control, PLoS ONE 6 (2011) e25995.