Munich Personal RePEc Archive

Inflation and deflation of the transfer space

Friedrich, Thomas (2020): Inflation and deflation of the transfer space.

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Abstract

The transfer space is a model of unidirectional substrate transfers from a source to a sink. Source and sink independently follow linear cost and saturating benefit functions. The transfer of substrate within the ensemble has nonlinear effects on the net profit (benefit minus cost) of the ensemble. Superadditivity or subadditivity are a result in comparison to the condition “no transfer” with simple additivity. In this investigation I observe dilution (inflation) and concentration (deflation) of the transfer space. Inflation and deflation change the substrate concentration and the step size of a featureless transfer vehicle called “coin”. Upon dilution the volume of the transfer space is increased and therefore the concentration of substrate is decreased. This leads to a reduction of the step size of a representative coin in comparison to the starting conditions. After concentration the volume is decreased and therefore the concentration of the substrate as well as the step size of the coin is increased relative to the starting condition. Dilution and concentration cause non-linear effects in source, sink, and the ensemble. In symmetric and many asymmetric ensembles (strong and weak) inflation is beneficial to the production of superadditivity but deflation is harmful. In asymmetric ensembles with very high cost in source and low to medium cost in sink (very strong ensemble), I observe a limit where the benefit of inflation turns over and becomes harmful. There, deflation is beneficial. In this model inflation (growth), deflation (scaling down), and division of labour appear to be investment decisions or evolutionary trends coexisting within the transfer space.

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