From bilateral two-way to unilateral one-way flow link-formation

Documento de trabajo ; We provide a model that bridges de gap between the simplest variation of two benchmark models of strategic network formation: Bala and Goyal s one-way ow model without decay, where links can be unilaterally formed, and a variation without decay of Jackson and Wolinsky s connections model based on bilateral formation of links. In the model introduced here, a link can be created unilaterally, but when it is only supported by one player the ow through the link only occurs towards the player supporting it and su¤ers some degree of decay, while when it is supported by both the ow runs without friction in both directions. When the decay in links supported by only one player is maximal (i.e. there is no ow) we have Jackson and Wolinsky s connections model without decay, while when ow in those links is perfect towards the player supporting them, we have Bala and Goyal s one-way ow model. We study Nash, strict Nash and pairwise Nash stability for the intermediate models. E¢ ciency and dynamics are also discussed. ; This research is supported by the Spanish Ministerio de Economía y Competitividad under projects ECO2012-31626 and ECO2012-31346. Both authors also bene t from the Basque Government Departamento de Educación, Política Lingüística y Cultura funding for Grupos Consolidados IT869-13 and IT568-13.