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A note on Propositions 7 and 8 of Goyal and Moraga (2001)

Author

Listed:
  • Yasunori Okumura

    (Kanagawa University)

Abstract

We will show that some results in Goyal and Moraga (2001), RAND Journal of Economics 32(4), are incomplete. The results are the social welfare and the total profit of the firms in the complete network is lower than those in some networks. They focus on the symmetric network gk where k is the number of links of each firm and show that the social welfare (the total profit of the firms) in the complete network gn-1 is lower than that in gn-2 where n is the number of the firms. However, their proofs are incomplete because there is no gn-2 if n is odd. Therefore, this paper gives the complete proof of their result. That is, since there is gn-3 if n is odd, we show the social welfare (total profit) in the gn-1 is lower than that in the network gn-3.

Suggested Citation

  • Yasunori Okumura, 2007. "A note on Propositions 7 and 8 of Goyal and Moraga (2001)," Economics Bulletin, AccessEcon, vol. 12(28), pages 1-6.
    • Handle: RePEc:ebl:ecbull:eb-07l10027
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    More about this item

    Keywords

    Symmetric networks: Network formation: R&D Oligopoly Graph theory;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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