Knowledge Flows and the Geography of Networks. A Strategic Model of Small World Formation

Nicolas Carayol , Pascale Roux

This paper aims to demonstrate that the strategic approach to link formation can generate networks that share some of the main structural properties of most real social networks. For this purpose, we introduce a spatialized variation of the Connections model (Jackson and Wolinsky 1996) to describe the strategic formation of links by agents who balance the benefits of forming links resulting from imperfect knowledge flows against their costs, which increase with geographic distance. We show, for intermediate levels of knowledge transferability, clustering occurs in geographical space and a few agents sustain distant connections. Such networks exhibit the small world property (high clustering and short average relational distances). When the costs of link formation are normally distributed across agents, asymmetric degree distributions are also obtained.

Mots clés: D85; C63; Z13; Strategic network formation; Time-inhomogeneous process; Knowledge flows; Small worlds; Monte Carlo simulations

Domaines: Économie et finance quantitative [q-fin]

Nicolas Carayol, Pascale Roux. Knowledge Flows and the Geography of Networks. A Strategic Model of Small World Formation. Journal of Economic Behavior and Organization, 2009, 71 (2), pp.414. ⟨10.1016/j.jebo.2009.02.005⟩. ⟨hal-00674100⟩