Communication and Cooperation in Public Network Situations

This paper focuses on sharing the costs and revenues of maintaining a public network communication structure. Revenues are assumed to be bilateral and communication links are publicly available but costly. It is assumed that agents are located at the vertices of an undirected graph in which the edges represent all possible communication links. We take the approach from cooperative game theory and focus on the corresponding network game in coalitional form which relates any coalition of agents to its highest possible net benefit, i.e., the net benefit corresponding to an optimal operative network. Although finding an optimal network in general is a difficult problem, it is shown that corresponding network games are (totally) balanced. In the proof of this result a specific relaxation, duality and techniques of linear production games with committee control play a role. Sufficient conditions for convexity of network games are derived. Possible extensions of the model and its results are discussed. Copyright Springer Science + Business Media, Inc. 2005