Communication networks with endogenous link strength
This paper analyzes the formation of networks when players choose how much to invest in each relationship. We suppose that players have a fixed endowment that they can allocate across links, and in the baseline model, suppose that link strength is an additively separable and convex function of individual investments, and that agents use the path which maximizes the product of link strengths. We show that both the stable and efficient network architectures are stars. However, the investments of the hub may differ in stable and efficient networks. Under alternative assumptions on the investment technology and the reliability measure, other network architectures can emerge as efficient and stable.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sanjeev Goyal & Jose Luis Moraga, 2000.
Tinbergen Institute Discussion Papers
00-075/1, Tinbergen Institute.
- Antoni Calvó-Armengol & Matthew O. Jackson, 2004.
"The Effects of Social Networks on Employment and Inequality,"
American Economic Review,
American Economic Association, vol. 94(3), pages 426-454, June.
- Matt Jackson, 2003. "The Effects of Social Networks on Employment and Inequality," Theory workshop papers 658612000000000032, UCLA Department of Economics.
- Bloch, Francis & Jackson, Matthew, 2004.
"The Formation of Networks with Transfers among Players,"
1194, California Institute of Technology, Division of the Humanities and Social Sciences.
- Bloch, Francis & Jackson, Matthew O., 2007. "The formation of networks with transfers among players," Journal of Economic Theory, Elsevier, vol. 133(1), pages 83-110, March.
- Matthew O. Jackson & Francis Bloch, 2004. "The Formation of Networks with Transfers among Players," Working Papers 2004.80, Fondazione Eni Enrico Mattei.
- Gilles, R.P. & Sarangi, S., 2004. "Social Network Formation with Consent," Discussion Paper 2004-70, Tilburg University, Center for Economic Research.
- Cabrales, Antonio & Zenou, Yves & Calvó-Armengol, Antoni, 2007. "Effort and synergies in network formation," UC3M Working papers. Economics we072515, Universidad Carlos III de Madrid. Departamento de Economía.
- Bramoulle, Yann & Kranton, Rachel, 2007. "Public goods in networks," Journal of Economic Theory, Elsevier, vol. 135(1), pages 478-494, July.
- Feri, Francesco, 2007. "Stochastic stability in networks with decay," Journal of Economic Theory, Elsevier, vol. 135(1), pages 442-457, July.
- Dutta, Bhaskar & Mutuswami, Suresh, 1997.
Journal of Economic Theory,
Elsevier, vol. 76(2), pages 322-344, October.
- Hojman, Daniel A. & Szeidl, Adam, 2008. "Core and periphery in networks," Journal of Economic Theory, Elsevier, vol. 139(1), pages 295-309, March.
- Goyal, Sanjeev & Konovalov, Alexander & Moraga-Gonzalez, Jose Luis, 2003. "Hybrid R&D," Economics Discussion Papers 8863, University of Essex, Department of Economics.
- Jacques Durieu & Hans Haller & Philippe Solal, 2004. "Nonspecific Networking," Game Theory and Information 0403005, EconWPA.
- Goyal, S. & Konovalov, A. & Moraga-Gonzalez, J.L., 2003.
Econometric Institute Research Papers
EI 2003-34, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
- Jan K. Brueckner, 2006.
Journal of Regional Science,
Wiley Blackwell, vol. 46(5), pages 847-865.
- Jan K. Brueckner, 2004. "Friendship Networks," Econometric Society 2004 North American Winter Meetings 184, Econometric Society.
- Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
- repec:spr:pharme:v:22:y:2004:i:4:p:225-244 is not listed on IDEAS
- Sanjeev Goyal, 2005. "Strong and Weak Links," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 608-616, 04/05.
When requesting a correction, please mention this item's handle: RePEc:eee:gamebe:v:66:y:2009:i:1:p:39-56. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.