A degree-distance-based connections model with negative and positive externalities

Philipp Moehlmeier, Agnieszka Rusinowska and Emily Tanimura
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Philipp Moehlmeier: Center for Mathematical Economics, Bielefeld University
Emily Tanimura: Center for Mathematical Economics, Bielefeld University

No 479, Center for Mathematical Economics Working Papers from Center for Mathematical Economics, Bielefeld University

Abstract: We develop a modification of the connections model by Jackson and Wolinsky (1996)that takes into account negative externalities arising from the connectivity of direct and indirect neighbors, thus combining aspects of the connections model and the co-author model. We consider a general functional form for agents’ utility that incorporates both the effects of distance and of neighbors’ degree. Consequently, we introduce a framework that can be seen as a degree-distancebased connections model with both negative and positive externalities. Our analysis shows how the introduction of negative externalities modifies certain results about stability and efficiency compared to the original connections model. In particular, we see the emergence of new stable structures, such as a star with links between peripheral nodes. We also identify structures, for example, certain disconnected networks, that are efficient in our model but which could not be efficient in the original connections model. While our results are proved for the general utility function, some of them are illustrated by using a specific functional form of the degree-distancebased utility.

Keywords: efficiency; pairwise stability; positive externalities; negative externalities; distance; degree; connections model (search for similar items in EconPapers)
Pages: 29
Date: 2014-04-30
New Economics Papers: this item is included in nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://pub.uni-bielefeld.de/download/2674096/2901850 First Version, 2013 (application/x-download)

Related works:
Journal Article: A Degree-Distance-Based Connections Model with Negative and Positive Externalities (2016)
Working Paper: A degree-distance-based connections model with negative and positive externalities (2016)
Working Paper: A degree-distance-based connections model with negative and positive externalities (2016)
Working Paper: A degree-distance-based connections model with negative and positive externalities (2016)
Working Paper: A degree-distance-based connections model with negative and positive externalities (2013)
Working Paper: A degree-distance-based connections model with negative and positive externalities (2013)
Working Paper: A degree-distance-based connections model with negative and positive externalities (2013)
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