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Inefficiencies in a model of spatial networks formation with positive externalities

[journal article]

Carayol, Nicolas; Roux, Pascale; Yıldızoğlu, Murat

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Please use the following Persistent Identifier (PID) to cite this document:http://nbn-resolving.de/urn:nbn:de:0168-ssoar-254620

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Abstract In this paper, we make an exploratory use of computational techniques (genetic algorithms and Monte Carlo simulations) to compute efficient and emergent networks in a spatialized version of the connections model of Jackson and Wolinski (Jackson, M.O., Wolinski, A., 1996. A strategic model of social and economic networks. Journal of Economic Theory 71, 44–74). This approach allows us to observe and discuss inefficiencies that arise in a strategic network formation context with imperfectly link-mediated positive externalities to connections and spatial link costs. Our results highlight that, depending on the strength of the externalities, emergent and efficient networks may share several structural properties. Nevertheless, emergent networks are insufficiently dense and should be more structured around central agents.
Classification Political Economy
Free Keywords Strategic network formation; Efficiency; Genetic algorithms; Monte Carlo simulations; D85; C63; D62; Z13
Document language English
Publication Year 2008
Page/Pages p. 495-511
Journal Journal of Economic Behavior & Organization, 67 (2008) 2
DOI http://dx.doi.org/10.1016/j.jebo.2007.04.004
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)