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On the stability of network structures with public goods

Author

Listed:
  • Mehtap Işık

    (Bogazici University)

  • Unal Zenginobuz

    (Bogazici University)

Abstract

This paper explores the formation of stable network structures in a model with public goods. The multiplicity of equilibria in the non-cooperative formulation of network formation games brings out further difficulties in analyzing stability of network structures. This contrasts with the cooperative game approach where payoffs for agents are predetermined and thereby the multiplicity of equilibrium issues are sidestepped. We took issue with the multiplicity of equilibrium effort levels exerted on a given network structure, and we suggested different stability definitions for such network structures under multiplicity of equilibria. We demonstrated how these stability notions work for the network structures with four agents where breaking and forming links is costless, and the cost of exerting effort level is linear.

Suggested Citation

  • Mehtap Işık & Unal Zenginobuz, 2010. "On the stability of network structures with public goods," Economics Bulletin, AccessEcon, vol. 30(3), pages 2425-2436.
    • Handle: RePEc:ebl:ecbull:eb-10-00496
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    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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