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From Assortative to Dissortative Networks: The Role of Capacity Constraints

Author

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  • Michael D. Konig
  • Claudio J. Tessone

    ()

  • Yves Zenou

Abstract

We consider a dynamic model of network formation where agents form and sever links based on the centrality of their potential partners. We show that the existence of capacity constrains in the amount of links an agent can maintain introduces a transition from dissortative to assortative networks. This effect can shed light on the distinction between technological and social networks as it gives a simple mechanism explaining how and why this transition occurs.

Suggested Citation

  • Michael D. Konig & Claudio J. Tessone & Yves Zenou, "undated". "From Assortative to Dissortative Networks: The Role of Capacity Constraints," Working Papers CCSS-10-012, ETH Zurich, Chair of Systems Design.
  • Handle: RePEc:stz:wpaper:ccss-10-012
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    References listed on IDEAS

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    1. Aouchiche, M. & Bell, F.K. & Cvetkovic, D. & Hansen, P. & Rowlinson, P. & Simic, S.K. & Stevanovic, D., 2008. "Variable neighborhood search for extremal graphs. 16. Some conjectures related to the largest eigenvalue of a graph," European Journal of Operational Research, Elsevier, vol. 191(3), pages 661-676, December.
    2. Soramäki, Kimmo & Bech, Morten L. & Arnold, Jeffrey & Glass, Robert J. & Beyeler, Walter E., 2007. "The topology of interbank payment flows," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 379(1), pages 317-333.
    3. Coralio Ballester & Antoni Calvó-Armengol & Yves Zenou, 2006. "Who's Who in Networks. Wanted: The Key Player," Econometrica, Econometric Society, vol. 74(5), pages 1403-1417, September.
    4. Vega-Redondo,Fernando, 2007. "Complex Social Networks," Cambridge Books, Cambridge University Press, number 9780521857406, May.
    5. Vega-Redondo, Fernando, 2006. "Building up social capital in a changing world," Journal of Economic Dynamics and Control, Elsevier, vol. 30(11), pages 2305-2338, November.
    6. Guimera, R. & Danon, L. & Diaz-Guilera, A. & Giralt, F. & Arenas, A., 2006. "The real communication network behind the formal chart: Community structure in organizations," Journal of Economic Behavior & Organization, Elsevier, vol. 61(4), pages 653-667, December.
    7. Antoni Calvó-Armengol & Eleonora Patacchini & Yves Zenou, 2009. "Peer Effects and Social Networks in Education," Review of Economic Studies, Oxford University Press, vol. 76(4), pages 1239-1267.
    8. Àlex Arenas & Antonio Cabrales & Leon Danon & Albert Díaz-Guilera & Roger Guimerà & Fernando Vega-Redondo, 2010. "Optimal information transmission in organizations: search and congestion," Review of Economic Design, Springer;Society for Economic Design, vol. 14(1), pages 75-93, March.
    9. Sanjeev Goyal & Marco J. van der Leij & José Luis Moraga-Gonzalez, 2006. "Economics: An Emerging Small World," Journal of Political Economy, University of Chicago Press, vol. 114(2), pages 403-432, April.
    10. Fagiolo, Giorgio, 2005. "Endogenous neighborhood formation in a local coordination model with negative network externalities," Journal of Economic Dynamics and Control, Elsevier, vol. 29(1-2), pages 297-319, January.
    11. M. Koenig & Claudio J. Tessone & Yves Zenou, "undated". "A Dynamic Model of Network Formation with Strategic Interactions," Working Papers CCSS-09-006, ETH Zurich, Chair of Systems Design.
    12. Vega-Redondo,Fernando, 2007. "Complex Social Networks," Cambridge Books, Cambridge University Press, number 9780521674096, May.
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    Citations

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    Cited by:

    1. Cohen-Cole, Ethan & Patacchini, Eleonora & Zenou, Yves, 2015. "Static and dynamic networks in interbank markets," Network Science, Cambridge University Press, vol. 3(01), pages 98-123, March.
    2. Jackson, Matthew O. & Zenou, Yves, 2015. "Games on Networks," Handbook of Game Theory with Economic Applications, Elsevier.
    3. Andreas Bjerre-Nielsen, 2015. "Sorting in Networks: Adversity and Structure," Papers 1503.07389, arXiv.org, revised Aug 2017.
    4. Mario V. Tomasello & Mauro Napoletano & Antonios Garas & Frank Schweitzer, 2017. "The rise and fall of R&D networks," Industrial and Corporate Change, Oxford University Press, vol. 26(4), pages 617-646.
    5. Fricke, Daniel & Finger, Karl & Lux, Thomas, 2013. "On assortative and disassortative mixing in scale-free networks: The case of interbank credit networks," Kiel Working Papers 1830, Kiel Institute for the World Economy (IfW).
    6. repec:spo:wpecon:info:hdl:2441/f6h8764enu2lskk9p5487a6cm is not listed on IDEAS

    More about this item

    Keywords

    Complex network; centrality; Capacity contraints;

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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