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Automation and Remote Control

, Volume 79, Issue 7, pp 1342–1360 | Cite as

Equilibrium in a Network Game with Production and Knowledge Externalities

  • V. D. Matveenko
  • A.V. Korolev
Mathematical Game Theory and Applications
  • 14 Downloads

Abstract

In each node of a network, economy is described by the simple two-period Romer’s model of endogenous growth with production and knowledge externalities. The sum of knowledge levels in the neighbor nodes causes an externality in the production of each node of the network. The game equilibrium in the network is investigated. The agents’ solutions depending on the size of externality are obtained. The uniqueness of inner equilibrium is proved. The role of passive agents in network formation is studied; in particular, the possibilities of adding a passive agent to a regular network, and also of joining of regular networks through nodes with passive agents. It is shown that the sum of knowledge levels in all the nodes decreases under adding of a new link.

Keywords

network network structure network game Nash equilibrium externality 

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Copyright information

© Pleiades Publishing, Ltd. 2018

Authors and Affiliations

  1. 1.Higher School of Economics (National Research University), St. Petersburg BranchSt. PetersburgRussia

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