Two-way Flow Networks with Small Decay
Kris De Jaegher and
Jurjen Kamphorst ()
No 10-125/1, Tinbergen Institute Discussion Papers from Tinbergen Institute
This discussion paper resulted in an article in the Journal of Economic Behavior & Organization , 2015, 109, 217-239.
This paper characterizes the set of equilibrium networks in the two-way flow model of network formation with small decay, and this for all increasing benefit functions of the players. We show that as long as the population is large enough, this set contains large- as well as small-diameter networks. For all benefit functions, the periphery-sponsored star is the most stable. When the marginal benefits of information are constant, all non-star networks are equally stable. With increasing marginal benefits of information, small-diameter networks in general tend to be more stable. However, with decreasing marginal benefits of information, large-diameter networks tend to be the most robust along with the periphery-sponsored star.
Keywords: Network formation; two-way flow model; decay; non-linear benefits (search for similar items in EconPapers)
JEL-codes: C72 D85 (search for similar items in EconPapers)
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Working Paper: Two-way Flow Networks with Small Decay (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20100125
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