Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/81122 
Year of Publication: 
2013
Series/Report no.: 
Working Papers No. 479
Publisher: 
Bielefeld University, Institute of Mathematical Economics (IMW), Bielefeld
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.
Subjects: 
connections model
degree
distance
negative externalities
positive externalities
pairwise stability
efficiency
JEL: 
D85
C70
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.