Efficient networks in connections models with heterogeneous nodes and links

Norma Olaizola and Federico Valenciano (federico.valenciano@ehu.es)

MPRA Paper from University Library of Munich, Germany

Abstract: We culminate the extension of the results on efficiency in the seminal connections model of Jackson and Wolinsky (1996), partially addressed in previous papers. In a model where both nodes and links are heterogeneous, we prove that efficiency is reached by networks with a particular type of architecture that we call "hierarchical flower networks". These networks have a unique non-trivial component, within which one of the nodes with a highest value is directly connected with the others in the component, among which some pairs are directly connected. Moreover, the greatest the sum of the values of two nodes, the greatest the strength of their connection, be it direct by a link or indirect by means of two links through the central node.

Keywords: Networks; Connections model; Heterogeneity; Efficiency (search for similar items in EconPapers)
JEL-codes: A14 C72 D85 (search for similar items in EconPapers)
Date: 2022-10-05
New Economics Papers: this item is included in nep-gth, nep-net and nep-ure
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