Year: 2026
Type: article
Abstract: Power law distributions are ubiquitous in socioeconomic contexts. While their general properties are well understood, it is often less clear why they regularly appear in empirical data. What are the generative mechanisms leading to power law distributions and why do we so often observe such distributions in socioeconomic contexts? This paper aims to partly fill this gap by discussing two candidate mechanisms, cumulative advantage and random multiplication, that appear regularly, but in variegated forms, in political economy arguments. These mechanisms do not only seem especially relevant for understanding power law distributions in socioeconomic contexts, but can also be captured in simple formal setups. On this basis, we identify core formal properties and explore how these mechanisms can be mapped to real-world problems and processes. In addition, we discuss the relation of power laws and their generative mechanisms to related concepts relevant in heterodox economics, like path dependence, cumulative processes, power asymmetries or non-ergodicity.
Source: Review of Political Economy
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: hybrid
Funder: Volkswagen Foundation
OpenAlex ID: W4414697239