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Agent based thought experiments: From powerful companies to catastrophic consumer synchronization

Sebastian M. Krause 

University Duisburg-Essen; Institute of Physics, Lotharstrasse 1, Duisburg 47048, Germany

Abstract
The global network of corporate control is marked by a central, tightly-connected "core" made of a relatively small number of large companies which control a significant part of the global economy. This organization could arise due to an explicit collusion among the central companies, or it could emerge from "rich-get-richer" effects. Here we show how a simple, adaptive rich-get-richer dynamics can account for this characteristic. The process we propose incorporates the indirect control that companies have on other companies they own, which in turn increases their buying power. The higher buying power can then be used to buy portions of more important companies. The system spontaneously organizes into a steady-state network comprised of a well-defined core-periphery structure, which reproduces well many qualitative observations in the real network of corporate control. Our model shows that this kind of centralized structure can emerge without it being an explicit goal of the companies involved.

As a second question, we deal with a hypothetic market situation: Electricity markets with time-dependent consumer prices. Electricity markets including fluctuating energy sources as, e.g. windmills, face the challenge to satisfy the continuous demand for electricity. One possible reaction is to use time-varying pricing schemes that shift power consumption for activities as for example washing and heating to times with excess supply. An artificial market, where many consumers perform time-flexible consumption due to individual stochastic decisions, shows extreme synchronization of demand at low prices. We find that synchronization occurs robustly and is therefore hard to control.

 

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Presentation: Oral at Econophysics Colloquium 2017, Symposium C, by Sebastian M. Krause
See On-line Journal of Econophysics Colloquium 2017

Submitted: 2017-03-07 13:26
Revised:   2017-03-07 13:42