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Local Spillovers, Convexity and the Strategic Substitutes Property in Networks

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  • Sudipta Sarangi

    ()

  • Pascal Billand

    ()

  • Christophe Bravard

    ()

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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File URL: http://bus.lsu.edu/McMillin/Working_Papers/pap11_01.pdf
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Bibliographic Info

Paper provided by Department of Economics, Louisiana State University in its series Departmental Working Papers with number 2011-01.

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Handle: RePEc:lsu:lsuwpp:2011-01

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  1. Sanjeev Goyal & Sumit Joshi, 2006. "Unequal connections," International Journal of Game Theory, Springer, vol. 34(3), pages 319-349, October.
  2. Furusawa, Taiji & Konishi, Hideo, 2007. "Free trade networks," Journal of International Economics, Elsevier, vol. 72(2), pages 310-335, July.
  3. Paul Belleflamme & Francis Bloch, 2004. "Market sharing agreements and collusive networks," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(2), pages 387-411, 05.
  4. 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.
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Cited by:
  1. Philipp Möhlmeier & Agnieszka Rusinowska & Emily Tanimura, 2013. "A degree-distance-based connections model with negative and positive externalities," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00825266, HAL.
  2. 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.

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