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Equilibrium in a Network Game with Production and Knowledge Externalities

  • Mathematical Game Theory and Applications
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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.

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Authors and Affiliations

  1. Higher School of Economics (National Research University), St. Petersburg Branch, St. Petersburg, Russia

    V. D. Matveenko & A.V. Korolev

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  1. V. D. Matveenko
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  2. A.V. Korolev
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Correspondence to V. D. Matveenko.

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Original Russian Text © V.D. Matveenko, A.V. Korolev, 2016, published in Matematicheskaya Teoriya Igr i Ee Prilozheniya, 2016, No. 1, pp. 106–137.

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Matveenko, V.D., Korolev, A. Equilibrium in a Network Game with Production and Knowledge Externalities. Autom Remote Control 79, 1342–1360 (2018). https://doi.org/10.1134/S0005117918070123

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  • DOI: https://doi.org/10.1134/S0005117918070123

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