I'm working on analyzing centralization incentives
I suggest that the value of a bitcoin is directly related to the trust in the decentralization of the system.
And the level of trust in Bitcoin is somewhat related to its (de)centralization. The higher the centralization, the lower the value per block.
I don't see any mention of that in your paper about 'centralization incentives'. Shouldn't that be part of the equation?
It's an externality. If your logic was right, coal power plants wouldn't exist, but they do.