Date of This Version
5-24-2022
Abstract
Most literature in strategic network formation shows that there is a substantial tension between stability and efficiency. In this note, I show that such is not the case in the twoway flow model with small decay studied by Bala and Goyal (2000a) and De Jaegher and Kamphorst (2015). Specifically, I show that every link receiver in a Nash network serves as an efficient trans-mitter of information. I also generalize this result to the case of player hetero-geneity and then provide a fine-detail characterization of effiicient networks.
Recommended Citation
Charoensook, Banchongsan, "On Efficiency and Stability in Two-way Flow Network with Small Decay: A Note" (May 24, 2022). Fondazione Eni Enrico Mattei Working Papers. Paper 1367.
https://services.bepress.com/feem/paper1367