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Inefficiencies in a model of spatial networks formation with positive externalities

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  • Carayol, Nicolas
  • Roux, Pascale
  • YIldIzoGlu, Murat

Abstract

In this paper, we make an exploratory use of computational techniques (genetic algorithms and Monte Carlo simulations) to compute efficient and emergent networks in a spatialized version of the connections model of Jackson and Wolinski [Jackson, M.O., Wolinski, A., 1996. A strategic model of social and economic networks. Journal of Economic Theory 71, 44-74]. This approach allows us to observe and discuss inefficiencies that arise in a strategic network formation context with imperfectly link-mediated positive externalities to connections and spatial link costs. Our results highlight that, depending on the strength of the externalities, emergent and efficient networks may share several structural properties. Nevertheless, emergent networks are insufficiently dense and should be more structured around central agents.

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  • Carayol, Nicolas & Roux, Pascale & YIldIzoGlu, Murat, 2008. "Inefficiencies in a model of spatial networks formation with positive externalities," Journal of Economic Behavior & Organization, Elsevier, vol. 67(2), pages 495-511, August.
  • Handle: RePEc:eee:jeborg:v:67:y:2008:i:2:p:495-511
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    11. Tesfatsion, Leigh, 1997. "A Trade Network Game with Endogenous Partner Selection," Staff General Research Papers Archive 1680, Iowa State University, Department of Economics.
    12. Matthew O. Jackson & Asher Wolinsky, 1995. "A Strategic Model of Social and Economic Networks," Discussion Papers 1098R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    13. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
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    16. Watts, Alison, 2001. "A Dynamic Model of Network Formation," Games and Economic Behavior, Elsevier, vol. 34(2), pages 331-341, February.
    17. Jackson, Matthew O. & Watts, Alison, 2002. "The Evolution of Social and Economic Networks," Journal of Economic Theory, Elsevier, pages 265-295.
    18. Robles, Jack, 1998. "Evolution with Changing Mutation Rates," Journal of Economic Theory, Elsevier, pages 207-223.
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    Cited by:

    1. Sylvain Barde, 2008. "A Generalised Variable Elasticity of Substitution Model of New Economic Geography," Documents de Travail de l'OFCE 2008-33, Observatoire Francais des Conjonctures Economiques (OFCE).
    2. Mauro Napoletano & Stefano Battiston & Michael D König & Frank Schweitzer, 2008. "The efficiency and evolution of R&D Networks," Sciences Po publications 2008-31, Sciences Po.
    3. Nicolas Carayol (ADIS, BETA) & Pascale Roux (ADIS, BETA) & Murat Yildizoglu (GREThA), 2007. "In search of efficient network structures: The needle in the haystack," Cahiers du GREThA 2007-11, Groupe de Recherche en Economie Théorique et Appliquée.
    4. Backman, Mikaela & Karlsson, Charlie, 2014. "Determinants of self-employment among commuters and non-commuters," Working Paper Series in Economics and Institutions of Innovation 365, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    5. repec:bla:presci:v:95:y:2016:i:4:p:755-774 is not listed on IDEAS
    6. Corinne Autant-Bernard & Pascal Billand & Nadine Massard, 2012. "Innovation and Space – From Externalities to Networks," Chapters,in: The Regional Economics of Knowledge and Talent, chapter 3 Edward Elgar Publishing.
    7. Stefania Vitali & Stefano Battiston & Mauro Gallegati, "undated". "Financial fragility and distress propagation in a network of regions," Working Papers ETH-RC-12-016, ETH Zurich, Chair of Systems Design.
    8. G. Fagiolo & A. Roventini., 2009. "On the Scientific Status of Economic Policy: A Tale of Alternative Paradigms," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 6.
    9. Vitali, Stefania & Battiston, Stefano & Gallegati, Mauro, 2016. "Financial fragility and distress propagation in a network of regions," Journal of Economic Dynamics and Control, Elsevier, vol. 62(C), pages 56-75.
    10. Nicolas Carayol & Pascale Roux & Murat Yıldızoğlu, 2008. "In search of efficient network structures: the needle in the haystack," Review of Economic Design, Springer;Society for Economic Design, pages 339-359.
    11. Mikaela Backman & Maureen Kilkenny, 2014. "Diversified experience, benefits to the individual and the firm," ERSA conference papers ersa14p18, European Regional Science Association.
    12. repec:spo:wpecon:info:hdl:2441/9935 is not listed on IDEAS
    13. repec:spo:wpecon:info:hdl:2441/7346 is not listed on IDEAS
    14. Nicolas Carayol & Pascale Roux & Murat Yıldızoğlu, 2008. "In search of efficient network structures: the needle in the haystack," Review of Economic Design, Springer;Society for Economic Design, pages 339-359.
    15. König, Michael D. & Battiston, S. & Napoletano, M. & Schweitzer, F., 2011. "Recombinant knowledge and the evolution of innovation networks," Journal of Economic Behavior & Organization, Elsevier, vol. 79(3), pages 145-164, August.

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