Working Paper: CEPR ID: DP8052
Authors: Michael D. König; Claudio J. Tessone; Yves Zenou
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 networksas it gives a simple mechanism explaining how and why this transition occurs.
Keywords: Bonacich centrality; nested split graphs; network formation; social interactions
JEL Codes: A14; C63; D85
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| capacity constraints (D24) | transition from dissortative to assortative networks (D85) |
| capacity constraints (D24) | link formation decisions (D85) |
| link formation decisions (D85) | network structure (D85) |
| capacity constraints (D24) | network structure (D85) |