A network formation game for bipartite exchange economies

  • Authors:
  • Eyal Even-Bar;Michael Kearns;Siddharth Suri

  • Affiliations:
  • University of Pennsylvania;University of Pennsylvania;University of Pennsylvania

  • Venue:
  • SODA '07 Proceedings of the eighteenth annual ACM-SIAM symposium on Discrete algorithms
  • Year:
  • 2007

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Abstract

We introduce a natural new network formation game in which buyers and sellers may purchase edges representing trading opportunities between themselves, and then accrue wealth in the resulting exchange economy. Our main result is an exact characterization of the set of bipartite graphs G that are Nash equilibria for this game. This characterization provides sharp limits on the amount and structure of wealth variation that can occur, as well as on the allowable equilibrium exchange rates.