Author(s)

Ryo Nagata

School of Political Science and Economics, Waseda University, Tokyo, Japan.

In this paper, we shed light on the Pareto distribution of wealth on the basis of an overlapping generation model. We deduce in the model that the basic reason for a particular shape of Pareto distribution is attributed to the distribution of utility function among consumers. More specifically, we show that a formula relating the distribution of utility function to the distribution of wealth is analytically obtainable on the basis of the Cobb-Douglas utility function. By simulation, we recognize that the formula actually gives us a well approximation of a Pareto distribution.

Pareto Distribution of Wealth, Overlapping Generation Model, Cobb-Douglas Utility Function, Steady State Price Equilibrium

Nagata, R. (2018) Pareto Distribution of Wealth Based on Overlapping Generation Model. Theoretical Economics Letters, 8, 2400-2408. doi: 10.4236/tel.2018.811155.