An integrated model of inter-firm trading networks that satisfies all major empirical laws

Abstract

We present a two-layered model capturing statistical properties of inter-firm trading networks. The framework integrates temporal network structures and money transport flows, previously studied in isolation. The first layer forms the network structure, transferred to the second layer for money transactions. The model enables the simultaneous emergence of tent-shaped distributions in growth rates within the agents, together with the emergence of scaling properties within the network in the study. Validation using Japan's inter-firm trading network confirms model accuracy, aligning with empirical laws on degree distribution, growth rates, firm age distribution, preferential attachment, and sales distribution. Our framework, resembling real-world intuition, holds potential as a forecasting tool for financial and prudential decision-making.