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Knowledge Flows and the Geography of Networks. A Strategic Model of Small World Formation

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  • Nicolas Carayol
  • Pascale Roux

Abstract

This paper aims to demonstrate that the strategic approach to link formation can generate networks that share some of the main structural properties of most real social networks. For this purpose, we introduce a spatialized variation of the Connections model (Jackson and Wolinsky 1996) to describe the strategic formation of links by agents who balance the benefits of forming links resulting from imperfect knowledge flows against their costs, which increase with geographic distance. We show, for intermediate levels of knowledge transferability, clustering occurs in geographical space and a few agents sustain distant connections. Such networks exhibit the small world property (high clustering and short average relational distances). When the costs of link formation are normally distributed across agents, asymmetric degree distributions are also obtained.

Suggested Citation

  • Nicolas Carayol & Pascale Roux, 2009. "Knowledge Flows and the Geography of Networks. A Strategic Model of Small World Formation," Post-Print hal-00674100, HAL.
    • Handle: RePEc:hal:journl:hal-00674100
    DOI: 10.1016/j.jebo.2009.02.005
    Note: View the original document on HAL open archive server: https://hal.science/hal-00674100
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    More about this item

    Keywords

    D85; C63; Z13; Strategic network formation; Time-inhomogeneous process; Knowledge flows; Small worlds; Monte Carlo simulations;
    All these keywords.

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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