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From bilateral two-way to unilateral one-way flow link-formation

Author

Listed:
  • Norma Olaizola

    (Universidad del País Vasco)

  • Federico Valenciano

    (Universidad del País Vasco)

Abstract

We provide a model that allows for a transition between the simplest variation of two basic models of strategic network formation: Bala and Goyal’s one-way flow model without decay, where links can be unilaterally formed, and a version without decay of Jackson and Wolinsky’s connections model based on bilateral formation of links. In the transitional model introduced here, these two benchmark models appear as extreme cases. We study efficiency and Nash, strict Nash and pairwise Nash stability for the intermediate model. Dynamics are also discussed.

Suggested Citation

  • Norma Olaizola & Federico Valenciano, 2016. "From bilateral two-way to unilateral one-way flow link-formation," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 7(2), pages 257-278, June.
    • Handle: RePEc:spr:series:v:7:y:2016:i:2:d:10.1007_s13209-016-0142-9
    DOI: 10.1007/s13209-016-0142-9
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    References listed on IDEAS

    as
    1. Vega-Redondo,Fernando, 2007. "Complex Social Networks," Cambridge Books, Cambridge University Press, number 9780521857406, November.
    2. Sanjeev Goyal, 2007. "Introduction to Connections: An Introduction to the Economics of Networks," Introductory Chapters, in: Connections: An Introduction to the Economics of Networks, Princeton University Press.
    3. Paul Belleflamme & Francis Bloch, 2004. "Market sharing agreements and collusive networks," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(2), pages 387-411, May.
    4. 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.
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    6. Margherita Comola & Marcel Fafchamps, 2014. "Testing Unilateral and Bilateral Link Formation," Economic Journal, Royal Economic Society, vol. 124(579), pages 954-976, September.
    7. Goyal, Sanjeev & Joshi, Sumit, 2003. "Networks of collaboration in oligopoly," Games and Economic Behavior, Elsevier, vol. 43(1), pages 57-85, April.
    8. Olaizola, Norma & Valenciano, Federico, 2014. "Asymmetric flow networks," European Journal of Operational Research, Elsevier, vol. 237(2), pages 566-579.
    9. Vega-Redondo,Fernando, 2007. "Complex Social Networks," Cambridge Books, Cambridge University Press, number 9780521674096, November.
    10. Francis Bloch & Matthew Jackson, 2006. "Definitions of equilibrium in network formation games," International Journal of Game Theory, Springer;Game Theory Society, vol. 34(3), pages 305-318, October.
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    More about this item

    Keywords

    Network formation; Unilateral link-formation; Bilateral link-formation; Efficiency; Stability; Dynamics;
    All these keywords.

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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