TITLE:
A Note on Partner Heterogeneity and Strict Nash Networks
AUTHORS:
Banchongsan Charoensook
KEYWORDS:
Network Formation, Nash Network, Two-Way Flow Network, Agent Heterogeneity, Efficient Network
JOURNAL NAME:
Theoretical Economics Letters,
Vol.12 No.4,
August
31,
2022
ABSTRACT: This note extends the studies on the impacts of
partner heterogeneity in two-way flow Strict Nash network of (Billand et al.,
2011) by allowing for the existence of small information decay. I show that the
incorporation of small information decay does not change the results of this
aforementioned paper: every Strict Nash network is a minimally connected Bi or
branching network. Since the studies on the roles of partner heterogeneity by
this aforementioned paper are limited to the assumption that link formation is
unilateral, I also propose another extension that studies the roles of partner
heterogeneity in a more general model of network formation proposed by
(Olaizola and Valenciano, 2015), which allows link formation to be both
unilateral and bilateral. I show that the inclusion of partner heterogeneity
breaks away a major result in this aforementioned paper: Nash network no longer
consists of at most one nontrivial strongly full subnetwork.