On the emergence of scale-free production networks

2015/09/03 by Gualdi, Stanislao, Mandel, Antoine
#FOS: Economics and business #FOS: Physical sciences #General Finance (q-fin.GN) #Physics and Society (physics.soc-ph)

paper · doi:10.48550/arxiv.1509.01483

Abstract

We propose a simple dynamical model of the formation of production networks among monopolistically competitive firms. The model subsumes the standard general equilibrium approach à la Arrow-Debreu but displays a wide set of potential dynamic behaviors. It robustly reproduces key stylized facts of firms' demographics. Our main result is that competition between intermediate good producers generically leads to the emergence of scale-free production networks.

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