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Local Spillovers, Convexity and the Strategic Substitutes Property in Networks

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  • Pascal Billand

    ()
    (Université de Lyon, Lyon, F-69003, France ; Université Jean Monnet, Saint-Etienne, F-42000, France ; CNRS, GATE Lyon St Etienne, Saint-Etienne, F-42000, France)

  • Christophe Bravard

    ()
    (Université de Lyon, Lyon, F-69007, France ; Université Jean Monnet, Saint-Etienne, F-42000, France ; CNRS, GATE Lyon St Etienne, Saint-Etienne, F-42000, France)

  • Sudipta Sarangi

    ()
    (Department of Economics, Virginia Tech and Louisiana State University)

Abstract

We provide existence results in a game with local spillovers where the payoff function satisfies both convexity and the strategic substitutes property. We show that there always exists a stable pairwise network in this game, and provide a condition which ensures the existence of pairwise equilibrium networks. Moreover, our existence proof allows us to characterize a pairwise equilibrium of these networks.

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Bibliographic Info

Paper provided by Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure in its series Working Papers with number 1110.

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Date of creation: 2011
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Handle: RePEc:gat:wpaper:1110

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Keywords: networks; existence; spillovers;

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  1. Paul Belleflamme & Francis Bloch, 2001. "Market Sharing Agreements and Collusive Networks," Working Papers 443, Queen Mary, University of London, School of Economics and Finance.
  2. Taiji Furusawa & Hideo Konishi, 2003. "Free Trade Networks," Working Papers 2003.55, Fondazione Eni Enrico Mattei.
  3. Pascal Billand & Christophe Bravard & Sudipta Sarangi, 2012. "Directed Networks with Spillovers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 14(6), pages 849-878, December.
  4. Sanjeev Goyal & Sumit Joshi, 2006. "Unequal connections," International Journal of Game Theory, Springer, vol. 34(3), pages 319-349, October.
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Cited by:
  1. Tim Hellmann, 2013. "On the existence and uniqueness of pairwise stable networks," International Journal of Game Theory, Springer, vol. 42(1), pages 211-237, February.
  2. Philipp Möhlmeier & Agnieszka Rusinowska & Emily Tanimura, 2013. "A degree-distance-based connections model with negative and positive externalities," Working Papers 479, Bielefeld University, Center for Mathematical Economics.

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