Partner Heterogeneity Increases the Set of Strict Nash Networks

Abstract

Galeotti et al. (2006, [2]) show that all minimal networks can be strict Nash in two-way flow models with full parameter heterogeneity while only inward pointing stars and the empty network can be strict Nash in the homogeneous parameter model of Bala and Goyal (2000, [1]). In this note we show that the introduction of partner heterogeneity plays a major role in substantially increasing the set of strict Nash equilibria.