Berlin 2018 – scientific programme
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SOE: Fachverband Physik sozio-ökonomischer Systeme
SOE 3: Economic Models I
SOE 3.4: Talk
Monday, March 12, 2018, 11:15–11:30, MA 001
The winner takes it all. But who wins and how? — •Chengyuan Han1,2,3, Malte Schröder4, and Dirk Witthaut1,3 — 1Forschungszentrum Jülich, Institute for Energy and Climate Research - Systems Analysis and Technology Evaluation (IEK-STE), 52428 Jülich, Germany — 2Department of Physics and Astronomy, Rheinische Friedrich-Wilhelms Universität Bonn, 53115 Bonn, Germany — 3Institute for Theoretical Physics, University of Cologne, 50937 Köln, Germany — 4Network Dynamics, Max Planck Institute for Dynamics and Self-Organization (MPIDS), 37077 Göttingen, Germany
In economies of scale, specific production costs decrease as the production increases. This leads to a centralization of production when transaction costs are negligible: The winner takes it all. But who wins this competition and how? We study a mathematical model of trade, which each node in a network individually tries to minimize the costs, including production and transaction costs, to satisfying a fixed demand. This optimization problem can be simplified to a local percolation model, and admitting an efficient solution. We show that centralization process can be discontinuous and study which node becomes the central producer. Surprisingly, the model reveals that closeness centrality is not always a good indicator to the final supplier of the network. In geographically embedded networks, nodes with the low degree and betweenness centrality are more likely to win. We also introduced the idea of Entropy to maximize the diversity of the purchase.