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From Assortative to Dissortative Networks: The Role of Capacity Constraints

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  • Zenou, Yves
  • Koenig, Michael
  • Tessone, Claudio J.

Abstract

We consider a dynamic model of network formation where agents form and sever links based on the centrality of their potential partners. We show that the existence of capacity constrains in the amount of links an agent can maintain introduces a transition from dissortative to assortative networks. This effect can shed light on the distinction between technological and social networks as it gives a simple mechanism explaining how and why this transition occurs.

Suggested Citation

  • Zenou, Yves & Koenig, Michael & Tessone, Claudio J., 2010. "From Assortative to Dissortative Networks: The Role of Capacity Constraints," CEPR Discussion Papers 8052, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:8052
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    7. Antoni Calvó-Armengol & Eleonora Patacchini & Yves Zenou, 2009. "Peer Effects and Social Networks in Education," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(4), pages 1239-1267.
    8. Àlex Arenas & Antonio Cabrales & Leon Danon & Albert Díaz-Guilera & Roger Guimerà & Fernando Vega-Redondo, 2010. "Optimal information transmission in organizations: search and congestion," Review of Economic Design, Springer;Society for Economic Design, vol. 14(1), pages 75-93, March.
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    12. M. Koenig & Claudio J. Tessone & Yves Zenou, "undated". "A Dynamic Model of Network Formation with Strategic Interactions," Working Papers CCSS-09-006, ETH Zurich, Chair of Systems Design.
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    Citations

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    Cited by:

    1. Cohen-Cole, Ethan & Patacchini, Eleonora & Zenou, Yves, 2015. "Static and dynamic networks in interbank markets," Network Science, Cambridge University Press, vol. 3(1), pages 98-123, March.
    2. Jackson, Matthew O. & Zenou, Yves, 2015. "Games on Networks," Handbook of Game Theory with Economic Applications,, Elsevier.
    3. Jiménez-Martínez, Antonio & Melguizo-López, Isabel, 2022. "Making friends: The role of assortative interests and capacity constraints," Journal of Economic Behavior & Organization, Elsevier, vol. 203(C), pages 431-465.
    4. Andreas Bjerre-Nielsen, 2015. "Sorting in Networks: Adversity and Structure," Papers 1503.07389, arXiv.org, revised Aug 2017.
    5. repec:hal:spmain:info:hdl:2441/f6h8764enu2lskk9p5487a6cm is not listed on IDEAS
    6. repec:hal:wpspec:info:hdl:2441/f6h8764enu2lskk9p5487a6cm is not listed on IDEAS
    7. Mario V. Tomasello & Mauro Napoletano & Antonios Garas & Frank Schweitzer, 2017. "The rise and fall of R&D networks," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 26(4), pages 617-646.
    8. Jianjun Lu & Shozo Tokinaga, 2013. "Analysis of cluster formations on planer cells based on genetic programming," Computational and Mathematical Organization Theory, Springer, vol. 19(4), pages 426-445, December.
    9. , D. & Tessone, Claudio J. & ,, 2014. "Nestedness in networks: A theoretical model and some applications," Theoretical Economics, Econometric Society, vol. 9(3), September.
    10. Fricke, Daniel & Finger, Karl & Lux, Thomas, 2013. "On assortative and disassortative mixing in scale-free networks: The case of interbank credit networks," Kiel Working Papers 1830, Kiel Institute for the World Economy (IfW Kiel).
    11. Zenou, Yves & Patacchini, Eleonora & Cohen-Cole, Ethan, 2011. "Systemic Risk and Network Formation in the Interbank Market," CEPR Discussion Papers 8332, C.E.P.R. Discussion Papers.
    12. Belhaj, Mohamed & Deroïan, Frédéric, 2021. "The value of network information: Assortative mixing makes the difference," Games and Economic Behavior, Elsevier, vol. 126(C), pages 428-442.
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    14. repec:spo:wpmain:info:hdl:2441/f6h8764enu2lskk9p5487a6cm is not listed on IDEAS

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    More about this item

    Keywords

    Bonacich centrality; Nested split graphs; Network formation; Social interactions;
    All these keywords.

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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