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Existence of Nash Networks in One-Way Flow Models

Author

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  • Sudipta Sarangi
  • Pascal Billand
  • Christophe Bravard

Abstract

This paper addresses the existence of Nash networks for the one-way flow model of Bala and Goyal (2000) in a number of different settings. First, we provide conditions for he existence of Nash networks in models where costs and values of links are heterogenous and players obtain resources from others only through the directed path between them. We find that costs of establishing links play a vital role in the existence of Nash networks. Next we examine the existence of Nash networks when there are congestion effects in the model. Then, we provide conditions for the existence of Nash networks in a model where a player�s payoff depends on the number of links she has established as well as on the number of links that other players in the population have created. More precisely, we show that convexity and increasing (decreasing) differences allow for the existence of Nash networks.

Suggested Citation

  • Sudipta Sarangi & Pascal Billand & Christophe Bravard, 2006. "Existence of Nash Networks in One-Way Flow Models," Departmental Working Papers 2006-05, Department of Economics, Louisiana State University.
    • Handle: RePEc:lsu:lsuwpp:2006-05
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    References listed on IDEAS

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    1. Sudipta Sarangi & Pascal Billand & Christophe Bravard, 2006. "Heterogeneity in Nash Networks," Departmental Working Papers 2006-18, Department of Economics, Louisiana State University.
    2. Billand, Pascal & Bravard, Christophe, 2005. "A note on the characterization of Nash networks," Mathematical Social Sciences, Elsevier, vol. 49(3), pages 355-365, May.
    3. Jackson, Matthew O. & Wolinsky, Asher, 1996. "A Strategic Model of Social and Economic Networks," Journal of Economic Theory, Elsevier, vol. 71(1), pages 44-74, October.
    4. Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
    5. Galeotti, Andrea & Goyal, Sanjeev & Kamphorst, Jurjen, 2006. "Network formation with heterogeneous players," Games and Economic Behavior, Elsevier, vol. 54(2), pages 353-372, February.
    6. Hans Haller & Jurjen Kamphorst & Sudipta Sarangi, 2007. "(Non-)existence and Scope of Nash Networks," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 31(3), pages 597-604, June.
    7. Billand, P. & Bravard, C., 2004. "Non-cooperative networks in oligopolies," International Journal of Industrial Organization, Elsevier, vol. 22(5), pages 593-609, May.
    8. Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, April.
    9. Haller, Hans & Sarangi, Sudipta, 2005. "Nash networks with heterogeneous links," Mathematical Social Sciences, Elsevier, vol. 50(2), pages 181-201, September.
    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.
    11. Hans Haller & Sudipta Sarangi, 2003. "Nash Networks with Heterogeneous Agents," Discussion Papers of DIW Berlin 337, DIW Berlin, German Institute for Economic Research.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Billand, Pascal & Bravard, Christophe & Sarangi, Sudipta, 2012. "Existence of Nash networks and partner heterogeneity," Mathematical Social Sciences, Elsevier, vol. 64(2), pages 152-158.
    2. Olaizola, Norma & Valenciano, Federico, 2014. "Asymmetric flow networks," European Journal of Operational Research, Elsevier, vol. 237(2), pages 566-579.
      • Olaizola Ortega, María Norma & Valenciano Llovera, Federico, 2012. "Asymmetric flow networks," IKERLANAK http://www-fae1-eao1-ehu-, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
    3. Haller, Hans, 2012. "Network extension," Mathematical Social Sciences, Elsevier, vol. 64(2), pages 166-172.
    4. Breitmoser, Yves & Vorjohann, Pauline, 2013. "Efficient structure of noisy communication networks," Mathematical Social Sciences, Elsevier, vol. 66(3), pages 396-409.
    5. Haller, Hans & Hoyer, Britta, 2019. "The common enemy effect under strategic network formation and disruption," Journal of Economic Behavior & Organization, Elsevier, vol. 162(C), pages 146-163.
    6. 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.
    7. 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.
    8. Sumit Joshi & Poorvi Vora, 2013. "Weak and strong multimarket bidding rings," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 53(3), pages 657-696, August.
    9. Norma Olaizola & Federico Valenciano, 2014. "One-way flow network formation under constraints," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 22(2), pages 624-643, July.
    10. Kinateder, Markus & Merlino, Luca Paolo, 2023. "Free riding in networks," European Economic Review, Elsevier, vol. 152(C).
    11. Cui, Zhiwei & Wang, Shouyang & Zhang, Jin & Zu, Lei, 2013. "Stochastic stability in one-way flow networks," Mathematical Social Sciences, Elsevier, vol. 66(3), pages 410-421.

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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