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ECONOMIC NETWORKING AND STABILITY
Author(s) -
Yao Shuntian,
Li Ke
Publication year - 2008
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2008.00422.x
Subject(s) - core (optical fiber) , stability (learning theory) , transaction cost , economics , network structure , point (geometry) , set (abstract data type) , database transaction , equilibrium point , general equilibrium theory , constant (computer programming) , mathematical economics , economy , network formation , microeconomics , computer science , mathematics , distributed computing , telecommunications , mathematical analysis , geometry , machine learning , world wide web , programming language , differential equation
. In this paper we discuss finite economies with the presence of transaction costs and with decreasing, constant or increasing returns. In general such an economy may have no general equilibrium existence and may even have an empty core. We analyse the trading networks of such an economy, introducing the concepts of locally stable network structure, un‐dominated locally stable network structures and most stable network structures. We point out that the set of most stable network structures could be treated as a solution concept for the empty core economies both in theoretical analysis and in application.