Simulating Market Concentration and Capital Distribution: Insights into Firm Dynamics and Economic Inequality

We use an agent-based model to study firm dynamics, market concentration, capital distribution and the critical role of banking capital in economic markets. Our model incorporates firm profit stochastic fluctuations allowing for firm entries and exits in economic markets. Our results show how shifts in economic parameters influence capital allocation and market concentration. One key result of our study is that under quite general assumptions even when wealth is initially evenly distributed among all participants, as time progresses, a small number of agents accumulate a substantial portion of the total wealth, while a large number of agents have a comparatively small share. This research is a critical tool for policymakers, economists, and researchers, facilitating a deeper comprehension of market structures, wealth distribution, and offering strategic responses to economic system dynamics.