On the Interaction between Heterogeneity and Decay in Two-Way Flow Models

GATE Working Paper No. 1109

20 Pages Posted: 9 Mar 2011

See all articles by Pascal Billand

Pascal Billand

Jean Monnet University

Christophe Bravard

Jean Monnet University, Saint-Etienne - CREUSET

Sudipta Sarangi

Virginia Polytechnic Institute & State University

Date Written: March 1, 2011

Abstract

In this paper we examine the role played by heterogeneity in the popular “connections model” of Jackson andWolinsky (1996). We prove that under heterogeneity in values or decay involving only two degrees of freedom, all networks can supported as Nash. Moreover, we show that Nash networks may not always exist. In the absence of decay, neither result can be found in a model with value heterogeneity. Finally, we show that on reducing heterogeneity, both the earlier “anything goes” result and the non-existence problem disappear.

Keywords: connections model, decay, two-way flow models

JEL Classification: C72, D85

Suggested Citation

Billand, Pascal and Bravard, Christophe and Sarangi, Sudipta, On the Interaction between Heterogeneity and Decay in Two-Way Flow Models (March 1, 2011). GATE Working Paper No. 1109, Available at SSRN: https://ssrn.com/abstract=1780841 or http://dx.doi.org/10.2139/ssrn.1780841

Pascal Billand (Contact Author)

Jean Monnet University ( email )

34, rue Francis Baulier
Saint-Etienne, 42023
France

Christophe Bravard

Jean Monnet University, Saint-Etienne - CREUSET ( email )

34, rue Francis Baulier
Saint-Etienne, 42023
France

Sudipta Sarangi

Virginia Polytechnic Institute & State University ( email )

250 Drillfield Drive
Blacksburg, VA 24061
United States

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