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Asymmetric flow networks

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  • Olaizola Ortega, María Norma
  • Valenciano Llovera, Federico

Abstract

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.

Suggested Citation

  • Olaizola Ortega, María Norma & Valenciano Llovera, Federico, 2012. "Asymmetric flow networks," IKERLANAK Ikerlanak;2012-60, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
  • Handle: RePEc:ehu:ikerla:8633
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    File URL: https://addi.ehu.es/handle/10810/8633
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    References listed on IDEAS

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    1. Galeotti, Andrea & Goyal, Sanjeev & Kamphorst, Jurjen, 2006. "Network formation with heterogeneous players," Games and Economic Behavior, Elsevier, vol. 54(2), pages 353-372, February.
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    Citations

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    Cited by:

    1. Norma Olaizola & Federico Valenciano, 2016. "From bilateral two-way to unilateral one-way flow link-formation," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 7(2), pages 257-278, June.
    2. Ashrafi, M. & Khanjani, M.J. & Fadaei-Kermani, E. & Barani, G.A., 2015. "Farm drainage channel network optimization by improved modified minimal spanning tree," Agricultural Water Management, Elsevier, vol. 161(C), pages 1-8.
    3. Olaizola Ortega, María Norma & Valenciano Llovera, Federico, 2015. "A Unifying model of strategic network formation," IKERLANAK Ikerlanak;2015-85, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
    4. Olaizola, Norma & Valenciano, Federico, 2015. "Unilateral vs. bilateral link-formation: A transition without decay," Mathematical Social Sciences, Elsevier, vol. 74(C), pages 13-28.
    5. Harmsen - van Hout, Marjolein J.W. & Dellaert, Benedict G.C. & Herings, P. Jean-Jacques, 2016. "Heuristic decision making in network linking," European Journal of Operational Research, Elsevier, vol. 251(1), pages 158-170.
    6. Olaizola Ortega, María Norma & Valenciano Llovera, Federico, 2014. "Unilateral vs. Bilateral link-formation: Bridging the gap," IKERLANAK Ikerlanak;2014-80, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.

    More about this item

    Keywords

    non-cooperative network formation; asymmetric flow; stability; efficiency; dynamics;

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D20 - Microeconomics - - Production and Organizations - - - General

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