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Searching for the physical origin of bifurcations in non-equilibrium economy

  • Regular Article - Statistical and Nonlinear Physics
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Abstract

The economy is never in equilibrium despite the fact that most of the studies is focused on equilibrium economy. The nonequilibrium economy shows abrupt changes such as bifurcation and catastrophe from time to time in the examples of financial market breakdown and economic crisis in recent years. In this study, we explore the physical origin of the bifurcation and catastrophe of the non-equilibrium economic systems based on our landscape and flux theory. From the underlying nonlinear supply-demand dynamics, both the bistability and limit cycle oscillations can appear. The transformation or bifurcation from bi-stability to limit cycle oscillation or vice versa can occur upon changing the slope of demand curve. The transformation of bifurcation of the monostable state of monopoly or competition to either the bistability of monopoly and competition or coherent limit cycle oscillation between monopoly and competition can appear upon parallel shifting the demand curve. We show that the average flux of the driving force can provide a dynamical origin for the bifurcation/catastrophe of the nonequilibrium economy while the dissipation cost characterized by the entropy production rate can provide a thermodynamic origin for the bifurcation/catastrophe of the nonequilibrium economy. The average flux and dissipation cost can then be used as indicators of critical points for the emergence of bifurcation and catastrophe. These quantitative measures may be used to predict crisis and catastrophe in the non-equilibrium economic system.

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Data Availability Statement

This manuscript has no associated data or the data will not be deposited. [Authors’ comment: This is a theoretical study and no experimental data. All data from the equations and algorithms during this study are shown in all the figures of this published article.]

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Acknowledgements

K.Z. and E.W. thank the supports from Ministry of Science and Technology of China Grants 2016YFA0203200 and National Nature Science Foundation of China Grants No. 21721003.

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Authors and Affiliations

  1. University of Science and Technology of China, Hefei, 230026, Anhui, People’s Republic of China

    Kun Zhang & Erkang Wang

  2. State Key Laboratory of Electroanalytical Chemistry, Changchun Institute of Applied Chemistry, Chinese Academy of Sciences, Changchun, 130022, Jilin, People’s Republic of China

    Kun Zhang & Erkang Wang

  3. Department of Chemistry and Physics, Stony Brook University, Stony Brook, NY, 11794, USA

    Jin Wang

  4. Department of Applied Mathematics and Statistics, Stony Brook University, Stony Brook, NY, 11794, USA

    Jin Wang

  5. Harriman School of Business Management, Stony Brook University, Stony Brook, NY, 11794, USA

    Jin Wang

Authors
  1. Kun Zhang
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  2. Erkang Wang
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  3. Jin Wang
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Contributions

JW and EW designed the project; KZ performed research; JW contributed new analytic tools; KZ and JW analyzed data; and all the authors wrote and reviewed the manuscript.

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Correspondence to Jin Wang.

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Zhang, K., Wang, E. & Wang, J. Searching for the physical origin of bifurcations in non-equilibrium economy. Eur. Phys. J. B 94, 213 (2021). https://doi.org/10.1140/epjb/s10051-021-00218-4

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  • DOI: https://doi.org/10.1140/epjb/s10051-021-00218-4

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