Critical phenomena in the market of competing firms induced by state interventionism

TL;DR

This paper introduces a simulation algorithm to study how government intervention affects market dynamics among competing firms, revealing critical points where market behavior sharply changes.

Contribution

It presents a novel flexible algorithm for simulating market scenarios with government intervention and analyzes critical phenomena and phase transitions in such markets.

Findings

Identified critical intervention levels causing market fluctuations

Observed a sharp increase in fluctuations at critical points

Detected local breakdown of average market technology

Abstract

We achieve two primary goals in this work. First, we propose a flexible algorithm that can simulate various scenarios of state/government intervention. Secondly, we analyze the scenario exhibiting the critical behavior of the market of competing firms, which depends on the degree of government intervention and the activity level of the firms. Thus, we have analyzed the second-order phase transition series, finding the levels of critical intervention and the critical exponent values. As a result, we have observed a sharp increase of fluctuations at a critical intervention level and the local breakdown of the average market technology concerning the frontier technology.