Non-Cooperative Network Formation with Network Maintenance Costs
This paper presents a model of non-cooperative network formation similar to Bala and Goyal (2000), except that marginal costs in the size of the network is increasing. Agents link among each other to gain information and update their links according to a better reply dynamics. In the long run the system settles in a state that consists of starred-wheel networks. This is reminiscent of some real world features. Collections of smaller disjoint networks connecting few agents are more common than global networks connecting all agents of the community. Di.erences within a connected component such as core and periphery are established.
|Date of creation:||2004|
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