Application of the Main Laws of Thermodynamics on Economics
107 Pages Posted: 26 Aug 2010 Last revised: 26 Jun 2016
Date Written: November 1, 2006
The main laws of thermodynamics are explained with respect to economics. Expressions like entropy, exergy, anergy, inner energy and free energy are defined qualitatively as well as quantitatively for the economy. The first and the second law are quantitatively deductes for their application on economic systems. The quantity entropy is treated very thoroughly and it is shown that the entropy (s) is directly proportional to the value added. The entropy, the free energy and the inner energy are the most regulating factors of economic processes. Closed Systems that have reached their maximum of entropy are 'dead'. It is shown with an quantitative example on the basis of balance sheets and profit and loss accounts what the outcome of a merger of two companies will be. The appendix shows details of an entropy tax which could be very much of interest, for instants, solving problems of the environment as our climate.
Contents: Preface - Introduction - Economic Systems, Energy Types, State Functions - The Laws of Thermodynamics and Economics - Qualitative and Quantitativ Treatment of the First Law in Economy - Qualitative and various Quantitative Treatments of the Second Law in Economy - Exergy and Anergy in Economy - Free Energy of Economic Systems - The Main Laws applied for Merger - Quantitative Calculation of a sample Merger - Entropy Tax - Symbols and Constants - Glossary of Terms - Literature.
Keywords: The Laws of Thermodynamics in Economics, The Role of Entropy in Economics, Inner Energy and Free Energy in Economics, Merger Processes
JEL Classification: A1, A12, C0, F0, G3, G34
Suggested Citation: Suggested Citation