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.
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.:
- Matt Jackson, 2003.
"The Effects of Social Networks on Employment and Inequality,"
Theory workshop papers
658612000000000032, UCLA Department of Economics.
- 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.
- Hojman, Daniel A. & Szeidl, Adam, 2008. "Core and periphery in networks," Journal of Economic Theory, Elsevier, vol. 139(1), pages 295-309, March.
- 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.
- Bramoulle, Yann & Kranton, Rachel, 2007. "Public goods in networks," Journal of Economic Theory, Elsevier, vol. 135(1), pages 478-494, July.
- Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
- Jan K. Brueckner, 2004.
Econometric Society 2004 North American Winter Meetings
184, Econometric Society.
- 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.
- 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.
- Goyal, S. & Moraga-Gonzalez, J.L., 2000.
Econometric Institute Research Papers
EI 2000-26A, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
- Dutta, Bhaskar & Mutuswami, Suresh, 1996.
971, California Institute of Technology, Division of the Humanities and Social Sciences.
- 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.
- 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.
- Feri, Francesco, 2007. "Stochastic stability in networks with decay," Journal of Economic Theory, Elsevier, vol. 135(1), pages 442-457, July.
- Gilles, R.P. & Sarangi, S., 2004. "Social Network Formation with Consent," Discussion Paper 2004-70, Tilburg University, Center for Economic Research.
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: (Shamier, Wendy)
If references are entirely missing, you can add them using this form.