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On the emergence of scale-free production networks

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  • Gualdi, Stanislao
  • Mandel, Antoine

Abstract

We propose a simple dynamical model for the formation of production networks among monopolistically competitive firms. The model subsumes the standard general equilibrium approach à la Arrow–Debreu but displays a wide set of potential dynamic behaviors. It robustly reproduces key stylized facts of firms׳ demographics. Our main result is that competition between intermediate good producers generically leads to the emergence of scale-free production networks.

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  • Gualdi, Stanislao & Mandel, Antoine, 2016. "On the emergence of scale-free production networks," Journal of Economic Dynamics and Control, Elsevier, vol. 73(C), pages 61-77.
  • Handle: RePEc:eee:dyncon:v:73:y:2016:i:c:p:61-77
    DOI: 10.1016/j.jedc.2016.09.012
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    11. Otto, Christian & Willner, Sven Norman & Wenz, Leonie & Frieler, Katja & Levermann, Anders, 2017. "Modeling loss-propagation in the global supply network: The dynamic agent-based model acclimate," OSF Preprints 7yyhd, Center for Open Science.
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    13. Veetil, Vipin P. & Wagner, Richard E., 2018. "Nominal GDP stabilization: Chasing a mirage," The Quarterly Review of Economics and Finance, Elsevier, vol. 67(C), pages 227-236.
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    More about this item

    Keywords

    C67; D50; L16; Production network; Scale-free networks; Firms demographics; Distribution of firms׳ size; General equilibrium; Monopolistic competition;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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