From Assortative to Dissortative Networks: The Role of Capacity Constraints

21 Pages Posted: 22 Nov 2010

See all articles by Michael Koenig

Michael Koenig

ETH Zürich

Claudio J. Tessone

ETH Zürich

Yves Zenou

Monash University - Department of Economics; Stockholm University; Research Institute of Industrial Economics (IUI); IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

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Date Written: October 2010

Abstract

We consider a dynamic model of network formation where agents form and sever links based on the centrality of their potential partners. We show that the existence of capacity constrains in the amount of links an agent can maintain introduces a transition from dissortative to assortative networks. This effect can shed light on the distinction between technological and social networks as it gives a simple mechanism explaining how and why this transition occurs.

Keywords: Bonacich centrality, nested split graphs, network formation, social interactions

JEL Classification: A14, C63, D85

Suggested Citation

Koenig, Michael and Tessone, Claudio J. and Zenou, Yves, From Assortative to Dissortative Networks: The Role of Capacity Constraints (October 2010). CEPR Discussion Paper No. DP8052. Available at SSRN: https://ssrn.com/abstract=1711065

Michael Koenig (Contact Author)

ETH Zürich ( email )

Zürichbergstrasse 18
8092 Zurich, CH-1015
Switzerland

Claudio J. Tessone

ETH Zürich ( email )

Zürichbergstrasse 18
8092 Zurich, CH-1015
Switzerland

HOME PAGE: http://www.sg.ethz.ch/people/tessonec

Yves Zenou

Monash University - Department of Economics ( email )

Australia

Stockholm University ( email )

Universitetsvägen 10
Stockholm, Stockholm SE-106 91
Sweden

Research Institute of Industrial Economics (IUI) ( email )

P.O. Box 5501
S-114 85 Stockholm
Sweden

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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