Incorporate Divers Demand to a Globalization Model

Abstract:

In the article published in physics review 2017 [1], an economic model was introduced, that allows the agents in a trading network to find the minimum cost by only inquire their neighbor agents. This process, because of the economy of scale, connects the globalization and the percolation theory. The following article [2] studied the connections between the topological properties of the agents in the above trading network and the probability of the agent become the centralized supplier of the system. The results suggested different properties of the agents are useful for different types of network scheme and the scale strengths. So far, both articles have only focused on the model when the demands are uniform throughout the system. Our current project introduces the diverse demand into the system, and it is implied through the entropy of the purchases in the system. From the preliminary results, three purchase schemes are observed in the system. These schemes are similar to the thermodynamic phases in a physical system. The scope of this project is to focus on the transition among the schemes and to understand how the system behaves when the agents consider both cost and diversity.

[1] Schröder, Malte, Jan Nagler, Marc Timme, and Dirk Witthaut. "Hysteretic Percolation from Locally Optimal Individual Decisions." Physical Review Letters, June 2018: 248302.
[2] Han, Chengyuan, Dirk Witthaut, Marc Timme, and Malte Schröder. "The winner takes it all--How to win network globalization." arXiv preprint, 2019: arXiv:1906.06092.