A Sensitive Flexible Network Approach

Noemí Navarro

No 2008-2, Working Papers from Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center

Abstract: This paper takes an axiomatic approach to find rules for allocating the value of a network when the externalities generated across components are identifiable. Two new, and different, allocation rules are defined and characterized in this context. The first one is an extension of the player-based flexible-network allocation rule (Jackson (2005)). The second one follows the flexible network approach from a component-wise point of view, where the notion of network flexibility is adjusted with a flavor of core stability. Furthermore, two other allocation rules are proposed by relaxing the axiom of equal treatment of vital players. These collapse into the player-based flexible-network allocation rule (Jackson (2005)) for zero-normalized value functions with no externalities across components.

Keywords: allocation rules; networks; player-based flexible-network allocation rule; Myerson value (search for similar items in EconPapers)
JEL-codes: C71 C79 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2008-03, Revised 2008-09
New Economics Papers: this item is included in nep-gth and nep-net
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