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Network Design under Local Complementarities

Author

Listed:
  • Mohamed Belhaj

    () (Centrale Marseille, (Aix-Marseille School of Economics), CNRS and EHESS)

  • Sebastian Bervoets

    () (Aix-Marseille University (Aix-Marseille School of Economics), CNRS and EHESS)

  • Frédéric Deroïan

    () (Aix-Marseille University (Aix-Marseille School of Economics), CNRS and EHESS)

Abstract

We consider agents playing a linear network game with strategic complementarities. We analyse the problem of a policy maker who can change the structure of the network in order to increase the aggregate efforts of the individuals and/or the sum of their utilities, given that the number of links of the network has to remain fixed. We identify some link reallocations that guarantee an improvement of aggregate efforts and/or aggregate utilities. With this comparative statics exercise, we then prove that the networks maximising both aggregate outcomes (efforts and utilities) belong to the class of Nested-Split Graphs.

Suggested Citation

  • Mohamed Belhaj & Sebastian Bervoets & Frédéric Deroïan, 2013. "Network Design under Local Complementarities," AMSE Working Papers 1309, Aix-Marseille School of Economics, Marseille, France, revised 12 Feb 2013.
  • Handle: RePEc:aim:wpaimx:1309
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    File URL: http://www.amse-aixmarseille.fr/sites/default/files/_dt/2012/wp_2013_-_nr_09.pdf
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    References listed on IDEAS

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    Cited by:

    1. Pascal Billand & Christophe Bravard & Subhadip Chakrabarti & Sudipta Sarangi, 2014. "A note on networks of collaboration in multi-market oligopolies," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(2), pages 325-335, September.
    2. Billand, Pascal & Bravard, Christophe & Durieu, Jacques & Sarangi, Sudipta, 2015. "Efficient networks for a class of games with global spillovers," Journal of Mathematical Economics, Elsevier, vol. 61(C), pages 203-210.
    3. Belhaj, Mohamed & Bramoullé, Yann & Deroïan, Frédéric, 2014. "Network games under strategic complementarities," Games and Economic Behavior, Elsevier, vol. 88(C), pages 310-319.

    More about this item

    Keywords

    Network; Linear Interaction; Bonacich Centralities; Strategic Complementarity; Nested Split Graphs.;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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