Spontaneous economic order

Tao, Yong

doi:10.1007/s00191-015-0432-6

Cited by 33 publications

(80 citation statements)

References 35 publications

(47 reference statements)

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“…However, Tao has considered the case of multiple industries. 17 Given the above economy, if each consumer's preferences are strictly convex and if each¯rm's production possibility sets are strongly convex, there exists a unique general equilibrium allocation ðx (i) Every consumer's utility is maximal; (ii) Every¯rm's pro¯t is maximal; (iii) Market clearing:…”

Section: Microstates and General Equilibriamentioning

confidence: 99%

“…11 Following Marshall's tradition, long-run competition is identi¯ed with a belief that every¯rm can freely enter and exit any industry. 19 Tao 17 showed that such a belief leads to two constraints for the production sets:…”

Section: Microstates and General Equilibriamentioning

confidence: 99%

“…It is easy to verify that (iv) and (v) violates strong convexity. Under the aforementioned conditions (i)-(v), Tao 17 has proved that a long-run competitive economy will have multiple equilibria satis¯es:…”

Section: Microstates and General Equilibriamentioning

confidence: 99%

“…According to Tao's argument, 12 the general equilibria actually determine all possible microstates of a given economy, and the statistical equilibrium determines the most probable macrostate which contains the most microstates. Tao 17 called such a macrostate \Spontaneous Economic Order" (i.e., the most probable economic order). The statistical equilibrium is equivalent to general equilibrium if and only if there is solely a general equilibrium (i.e., a unique microstate).…”

Section: Introductionmentioning

confidence: 99%

“…The statistical equilibrium is equivalent to general equilibrium if and only if there is solely a general equilibrium (i.e., a unique microstate). In particular, Tao 17 showed that if a spontaneous economic order emerges, the aggregate output can be written as a function of rms' number and technological progress, and the empirical tests of Tao's theory were also fully studied by Tao et al 18 On the other hand, the neoclassical growth model requires that the aggregate output is generally a function of labor, capital and technological progress. This means that if we combine neoclassical growth model with Tao's spontaneous order model, we may discern how labors match¯rms in the process of economic growth.…”

Section: Introductionmentioning

confidence: 99%

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Golden-Rule Level of the Employment

Tao

2017

Rep. Adv. Phys. Sci.

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The competitive economy, over a long time scale, would produce a large number of general equilibria, each of which can be regarded as a possible microstate of this economy. Then by the principle of maximum entropy, we can obtain the most probable macrostate which in the case of perfect competition involving a single industry will lead to a Solow-type aggregate production function. By this aggregate production function, one can make clear how labors match¯rms on the balanced growth path. Here, we prove that when the capital stock of a society arrives at the golden-rule level on the balanced growth path, the social employment will reach the best level at which every¯rm on average employs an optimal amount of workers.

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Section: Microstates and General Equilibriamentioning

confidence: 99%

Section: Microstates and General Equilibriamentioning

confidence: 99%

Section: Microstates and General Equilibriamentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Golden-Rule Level of the Employment

Tao

2017

Rep. Adv. Phys. Sci.

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Energy theory of periodic economic growth

2020

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This article shows that the sudden end of economic expansion (movement, wealth) emerges as a natural, physical feature of the spreading movement, which has access to power (money), freedom to morph, and power storage (savings) for future movement on even greater areas. The movement is driven by power generation, which is interspaced with power savings on the same area. The theory is constructed systematically from the physical basis of economics concepts (money, savings, time, and bubbles) to a physics model that accounts for the time-dependent spreading of movement on an area. Previous study has shown that physics accounts for the proportionality between the annual wealth (GDP) of a population and the annual consumption of fuel to generate power for that population. The present theory extends this view to the more realistic situation where every movement in society (wealth and fuel consumption) is time dependent.

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Exponential structure of income inequality: evidence from 67 countries

Tao

Zhou

et al. 2017

J Econ Interact Coord

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Economic competition between humans leads to income inequality, but, so far, there has been little understanding of underlying quantitative mechanisms governing such a collective behavior. We analyze datasets of household income from 67 countries, ranging from Europe to Latin America, North America and Asia. For all of the countries, we find a surprisingly uniform rule: Income distribution for the great majority of populations (low and middle income classes) follows an exponential law. To explain this empirical observation, we propose a theoretical model within the standard framework of modern economics and show that free competition and Rawls' fairness are the underlying mechanisms producing the exponential pattern. The free parameters of the exponential distribution in our model have an explicit economic interpretation and direct relevance to policy measures intended to alleviate income inequality.

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Spontaneous economic order

Cited by 33 publications

References 35 publications

Golden-Rule Level of the Employment

Golden-Rule Level of the Employment

Energy theory of periodic economic growth

Exponential structure of income inequality: evidence from 67 countries

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