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Universal Growth in Production Economies.

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Authors
Simina Brânzei, Ruta Mehta, Noam Nisan

We study a simple variant of the von Neumann model of an expanding economy,in which multiple producers produce goods according to their productionfunction. The players trade their goods at the market and then use the bundlesacquired as inputs for the production in the next round. We show that a simpledecentralized dynamic, where players update their bids proportionally to howuseful the investments were in the past round, leads to growth of the economyin the long term (whenever growth is possible) but also creates unboundedinequality, i.e. very rich and very poor players emerge. We analyze severalother phenomena, such as how the relation of a player with others influencesits development and the Gini index of the system.

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