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A degree-distance-based connections model with negative and positive externalities

Author

Listed:
  • Moehlmeier, Philipp

    (Center for Mathematical Economics, Bielefeld University)

  • Rusinowska, Agnieszka

    (Center for Mathematical Economics, Bielefeld University)

  • Tanimura, Emily

    (Center for Mathematical Economics, Bielefeld University)

Abstract
We develop a modification of the connections model by Jackson and Wolinsky (1996)that takes into account negative externalities arising from the connectivity of direct and indirect neighbors, thus combining aspects of the connections model and the co-author model. We consider a general functional form for agents’ utility that incorporates both the effects of distance and of neighbors’ degree. Consequently, we introduce a framework that can be seen as a degree-distancebased connections model with both negative and positive externalities. Our analysis shows how the introduction of negative externalities modifies certain results about stability and efficiency compared to the original connections model. In particular, we see the emergence of new stable structures, such as a star with links between peripheral nodes. We also identify structures, for example, certain disconnected networks, that are efficient in our model but which could not be efficient in the original connections model. While our results are proved for the general utility function, some of them are illustrated by using a specific functional form of the degree-distancebased utility.

Suggested Citation

  • Moehlmeier, Philipp & Rusinowska, Agnieszka & Tanimura, Emily, 2014. "A degree-distance-based connections model with negative and positive externalities," Center for Mathematical Economics Working Papers 479, Center for Mathematical Economics, Bielefeld University.
    • Handle: RePEc:bie:wpaper:479
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    References listed on IDEAS

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    Cited by:

    1. Foerster, Manuel & Mauleon, Ana & Vannetelbosch, Vincent J., 2021. "Shadow links," Journal of Economic Theory, Elsevier, vol. 197(C).
      • FOERSTER Manuel, & MAULEON Ana, & VANNETELBOSCH Vincent,, 2018. "Shadow links," LIDAM Discussion Papers CORE 2018030, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
      • Foerster, Manuel & Mauleon, Ana & Vannetelbosch, Vincent, 2021. "Shadow links," LIDAM Reprints CORE 3171, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Hellmann, Tim & Staudigl, Mathias, 2014. "Evolution of social networks," European Journal of Operational Research, Elsevier, vol. 234(3), pages 583-596.
    3. Antoine Mandel & Xavier Venel, 2022. "Sequential competition and the strategic origins of preferential attachment," International Journal of Game Theory, Springer;Game Theory Society, vol. 51(3), pages 483-508, November.
    4. László Á. Kóczy, 2022. "Core-stability over networks with widespread externalities," Annals of Operations Research, Springer, vol. 318(2), pages 1001-1027, November.
    5. Möhlmeier, Philipp & Rusinowska, Agnieszka & Tanimura, Emily, 2018. "Competition for the access to and use of information in networks," Mathematical Social Sciences, Elsevier, vol. 92(C), pages 48-63.
    6. Mohsen Mosleh & Peter Ludlow & Babak Heydari, 2016. "Distributed Resource Management in Systems of Systems: An Architecture Perspective," Systems Engineering, John Wiley & Sons, vol. 19(4), pages 362-374, July.
    7. Chenghong Luo & Ana Mauleon & Vincent Vannetelbosch, 2021. "Network formation with myopic and farsighted players," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(4), pages 1283-1317, June.
    8. Pramod C. Mane & Nagarajan Krishnamurthy & Kapil Ahuja, 2019. "Formation of Stable and Efficient Social Storage Cloud," Games, MDPI, vol. 10(4), pages 1-17, November.
    9. Jan-Peter Siedlarek, 2023. "Making friends meet: network formation with introductions," International Journal of Game Theory, Springer;Game Theory Society, vol. 52(4), pages 1037-1076, December.
    10. Somayeh Koohborfardhaghighi & Jörn Altmann, 2015. "A Network Formation Model for Social Object Networks," Springer Books, in: Zhenji Zhang & Zuojun Max Shen & Juliang Zhang & Runtong Zhang (ed.), Liss 2014, edition 127, pages 615-625, Springer.
    11. Ping Sun & Elena Parilina, 2024. "Networks with nonordered partitioning of players: stability and efficiency with neighborhood-influenced cost topology," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 99(3), pages 271-305, June.
    12. Adriani, Fabrizio & Ladley, Dan, 2021. "Social distance, speed of containment and crowding in/out in a network model of contagion," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 597-625.
    13. Pramod C. Mane & Nagarajan Krishnamurthy & Kapil Ahuja, 2023. "Resource availability in the social cloud: An economics perspective," Bulletin of Economic Research, Wiley Blackwell, vol. 75(2), pages 541-566, April.

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    More about this item

    Keywords

    efficiency; pairwise stability; positive externalities; negative externalities; distance; degree; connections model;
    All these keywords.

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General

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