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Endogenous Link Strength in Directed Communication Networks


  • Frédéric Deroïan

    () (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales)


We present a model of communication network formation in which links'strengths are endogenously determined by individual incentives. Agents are endowed with a fixed amount of resource which they can distribute as they want in directed links. Individuals capture benefits from both direct and indirect access to others, in a way that takes into account the strength of each link. The wheel architecture is shown to be the unique efficient and stable architecture under mild restriction.

Suggested Citation

  • Frédéric Deroïan, 2006. "Endogenous Link Strength in Directed Communication Networks," Working Papers halshs-00410544, HAL.
  • Handle: RePEc:hal:wpaper:halshs-00410544
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    References listed on IDEAS

    1. Falk Armin & Kosfeld Michael, 2012. "It's all about Connections: Evidence on Network Formation," Review of Network Economics, De Gruyter, vol. 11(3), pages 1-36, September.
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      • Dutta, Bhaskar & Mutuswami, Suresh, 1996. "Stable Networks," Working Papers 971, California Institute of Technology, Division of the Humanities and Social Sciences.
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    5. Hojman, Daniel & Szeidl, Adam, 2006. "Core and Periphery in Endogenous Networks," Working Paper Series rwp06-022, Harvard University, John F. Kennedy School of Government.
    6. Kim, Chongmin & Wong, Kam-Chau, 2007. "Network formation and stable equilibrium," Journal of Economic Theory, Elsevier, vol. 133(1), pages 536-549, March.
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    8. Feri, Francesco, 2007. "Stochastic stability in networks with decay," Journal of Economic Theory, Elsevier, vol. 135(1), pages 442-457, July.
    9. Matsubayashi, Nobuo & Yamakawa, Shigetaka, 2006. "A note on network formation with decay," Economics Letters, Elsevier, vol. 93(3), pages 387-392, December.
    10. 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.
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    Cited by:

    1. Harmsen - van Hout, Marjolein J.W. & Herings, P. Jean-Jacques & Dellaert, Benedict G.C., 2013. "Communication network formation with link specificity and value transferability," European Journal of Operational Research, Elsevier, vol. 229(1), pages 199-211.
    2. repec:eee:ecolet:v:162:y:2018:i:c:p:86-92 is not listed on IDEAS
    3. Michael R. Galbreth & Bikram Ghosh & Mikhael Shor, 2012. "Social Sharing of Information Goods: Implications for Pricing and Profits," Marketing Science, INFORMS, vol. 31(4), pages 603-620, July.
    4. Breitmoser, Yves & Vorjohann, Pauline, 2013. "Efficient structure of noisy communication networks," Mathematical Social Sciences, Elsevier, vol. 66(3), pages 396-409.
    5. Chiu Ki So, 2016. "Network Formation with Endogenous Link Strength and Decreasing Returns to Investment," Games, MDPI, Open Access Journal, vol. 7(4), pages 1-9, December.
    6. Francesco Feri & Miguel A.Mel?ndez-Jim?nez, 2009. "Coordination in Evolving Networks with Endogenous Decay," Working Papers 2009-19, Faculty of Economics and Statistics, University of Innsbruck.
    7. Deroian, F., 2008. "Dissemination of spillovers in cost-reducing alliances," Research in Economics, Elsevier, vol. 62(1), pages 34-44, March.
    8. Francesco Feri & Miguel Meléndez-Jiménez, 2013. "Coordination in evolving networks with endogenous decay," Journal of Evolutionary Economics, Springer, vol. 23(5), pages 955-1000, November.
    9. Kenan Huremovic, 2014. "Rent Seeking and Power Hierarchies: A Noncooperative Model of Network Formation with Antagonistic Links," Working Papers 2014.45, Fondazione Eni Enrico Mattei.
    10. Charoensook, Banchongsan, 2016. "Nodewise Decay in Two-way Flow Nash Network: a Study of Network Congestion," ET: Economic Theory 249353, Fondazione Eni Enrico Mattei (FEEM).


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