Communication networks with endogeneous link strength

Francis Bloch and Bhaskar Dutta

Discussion Papers from Indian Statistical Institute, Delhi

Abstract: This paper analyzes the formation of networks when players choose how much to invest in each relationship. We suppose that players have a fixed endowment that they can allocate across links, and in the baseline model, suppose that link strength is an additively separable and convex function of individual investments, and that agents use the path which maximizes the product of link strengths. We show that both the stable and efficient network architectures are stars. However, the investments of the hub may differ in stable and efficient networks. Under alternative assumptions on the investment technology and the reliability measure, other network architectures can emerge as efficient and stable.

Keywords: communication networks; network reliability; endogenous link strength (search for similar items in EconPapers)
JEL-codes: C70 D85 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2008-09
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http://www.isid.ac.in/~pu/dispapers/dp08-15.pdf (application/pdf)

Related works:
Journal Article: Communication networks with endogenous link strength (2009)
Working Paper: Communication Networks with Endogeneous Link Strength (2005)
Working Paper: Communication Networks with Endogenous Link Strength (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:alo:isipdp:08-15

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