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A characterization of the equilibrium of information flow networks and the dynamics of network formation are studied under the premise of local information flow. The main result of this paper is that it gives the dynamic formation procedure in the local information flow network. The research shows that core-periphery structure is the most representative equilibrium network in the case of the local information flow without information decay whatever the cost of information is homogeneous or heterogeneous. If the profits and link costs of local information flow networks with information decay are homogeneous empty network and complete network are typical equilibrium networks, which are related to the costs of linking.

A Dynamic Formation Procedure of Information Flow Networks