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Asymmetric flow networks

  • Olaizola Ortega, María Norma
  • Valenciano Llovera, Federico

This paper provides a new model of network formation that bridges the gap between the two benchmark models by Bala and Goyal, the one-way flow model, and the two-way flow model, and includes both as particular extreme cases. As in both benchmark models, in what we call an "asymmetric flow" network a link can be initiated unilaterally by any player with any other, and the flow through a link towards the player who supports it is perfect. Unlike those models, in the opposite direction there is friction or decay. When this decay is complete there is no flow and this corresponds to the one-way flow model. The limit case when the decay in the opposite direction (and asymmetry) disappears, corresponds to the two-way flow model. We characterize stable and strictly stable architectures for the whole range of parameters of this "intermediate" and more general model. We also prove the convergence of Bala and Goyal's dynamic model in this context.

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File URL: http://hdl.handle.net/10810/8633
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Paper provided by Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I in its series IKERLANAK with number 8633.

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Date of creation: 22 Jun 2012
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Handle: RePEc:ehu:ikerla:8633
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Order Information: Postal: Dpto. de Fundamentos del Análisis Económico I, Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain
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  1. Francis Bloch & Bhaskar Dutta, 2008. "Communication networks with endogeneous link strength," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 08-15, Indian Statistical Institute, New Delhi, India.
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  12. Harmsen-van Hout Marjolein J.W. & Herings P. Jean-Jacques & Dellaert Benedict G.C., 2011. "Communication network formation with link specificity and value transferability," Research Memorandum 022, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
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  17. Lim, Gino J. & Zangeneh, Shabnam & Reza Baharnemati, M. & Assavapokee, Tiravat, 2012. "A capacitated network flow optimization approach for short notice evacuation planning," European Journal of Operational Research, Elsevier, vol. 223(1), pages 234-245.
  18. Monsuur, Herman, 2007. "Stable and emergent network topologies: A structural approach," European Journal of Operational Research, Elsevier, vol. 183(1), pages 432-441, November.
  19. Jean Derks & Martijn Tennekes, 2009. "A note on the existence of Nash networks in one-way flow models," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 41(3), pages 515-522, December.
  20. Andrea Galeotti, 2006. "One-way flow networks: the role of heterogeneity," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(1), pages 163-179, September.
  21. Christophe Bravard & Sudipta Sarangi & Pascal Billand, 2008. "A Note on Existence of Nash Networks in One-way Flow," Economics Bulletin, AccessEcon, vol. 3(79), pages 1-4.
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  25. repec:ebl:ecbull:v:3:y:2008:i:79:p:1-4 is not listed on IDEAS
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