A Unifying model of strategic network formation

María Norma Olaizola Ortega and Federico Valenciano

IKERLANAK from Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I

Abstract: We provide a model that merges two basic models of strategic network formation and incorporates them as extreme cases: Jackson and Wolinsky' s connections model based on bilateral formation of links, and Bala and Goyal' s two-way flow model, where links can be unilaterally formed. In our model a link can be created unilaterally, but when it is only supported by one of the two players the flow through it suffers some friction or decay, but more than when it is supported by both players. When the friction in singly-supported links is maximal (i.e. there is no fl ow) we have Jackson and Wolinsky 's connections model, while when fl ow in singly-supported links is as good as in doubly-supported links we have Bala and Goyal' s two-way flow model. In this setting, a joint generalization of the results relative to efficiency and stability in both seminal papers is achieved, and the robustness in both models is tested with positive results.

Keywords: network formation; unilateral link-formation; bilateral link-formation; efficiency; stability (search for similar items in EconPapers)
Date: 2015-02-17
New Economics Papers: this item is included in nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://addi.ehu.eus/handle/10810/14746 (application/pdf)

Related works:
Journal Article: A unifying model of strategic network formation (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehu:ikerla:14746

Ordering information: This working paper can be ordered from
Dpto. de Fundamentos del Análisis Económico I, Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain

Access Statistics for this paper

More papers in IKERLANAK from Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I Contact information at EDIRC.
Bibliographic data for series maintained by Alcira Macías Redondo ().