A degree-distance-based connections model with negative and positive externalities / P. Moehlmeier, A. Rusinowska, E. Tanimura
VerfasserMöhlmeier, Philipp ; Rusinowska, Agnieszka ; Tanimura, Emily
ErschienenBielefeld, Germany : Universität Bielefeld, Faculty of Business Administration and Economics, May 2013
Elektronische Ressource
Umfang1 Online-Ressource (28 Seiten) : Diagramme
SerieWorking papers in economics and management ; No. 11-2013
SchlagwörterWolinsky, Asher / Jackson, Matthew O. / Modell / Änderung
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A degree-distance-based connections model with negative and positive externalities [0.28 mb]

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.

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