FEEM working papers "Note di lavoro" series
2016 .065

Nodewise Decay in Two-way Flow Nash Network: a Study of Network Congestion


Authors: Banchongsan Charoensook
Series: Economic Theory
Editor: Carlo Carraro
Keywords: Two-way Flow Network, Network Formation, Information Network
JEL n.: C72, D85

Abstract

This paper studies a noncooperative model of network formation. Built upon the two-way flow model of Bala and Goyal (2000a), it assumes that information decay as it flows through each agent, and the decay is increasing and concave in the number of his links. This assumption results in the fact that a large set of Nash networks are disconnected and consist of components of different sizes, a feature that resembles that of real-world networks. Discussions on this insight are provided.

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Suggested citation: Charoensook, B., (2016), 'Nodewise Decay in Two-way Flow Nash Network: a Study of Network Congestion', Nota di Lavoro 65.2016, Milan, Italy: Fondazione Eni Enrico Mattei

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