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A note on local spillovers, convexity, and the strategic substitutes property in networks

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  • Pascal Billand
  • Christophe Bravard
  • Sudipta Sarangi

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. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Pascal Billand & Christophe Bravard & Sudipta Sarangi, 2013. "A note on local spillovers, convexity, and the strategic substitutes property in networks," Theory and Decision, Springer, vol. 75(2), pages 293-304, August.
    • Handle: RePEc:kap:theord:v:75:y:2013:i:2:p:293-304
    DOI: 10.1007/s11238-012-9328-1
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    References listed on IDEAS

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    1. Furusawa, Taiji & Konishi, Hideo, 2007. "Free trade networks," Journal of International Economics, Elsevier, vol. 72(2), pages 310-335, July.
    2. Jackson, Matthew O. & Wolinsky, Asher, 1996. "A Strategic Model of Social and Economic Networks," Journal of Economic Theory, Elsevier, vol. 71(1), pages 44-74, October.
    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, May.
    4. Sanjeev Goyal & Sumit Joshi, 2006. "Unequal connections," International Journal of Game Theory, Springer;Game Theory Society, vol. 34(3), pages 319-349, October.
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    Cited by:

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    2. Currarini, Sergio & Fumagalli, Elena & Panebianco, Fabrizio, 2017. "Peer effects and local congestion in networks," Games and Economic Behavior, Elsevier, vol. 105(C), pages 40-58.

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    More about this item

    Keywords

    Networks; Existence; Spillovers; C70; D85;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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