On the emergence of scale-free production networks

• Main Authors: Gualdi, Stanislao, Mandel, Antoine
• Format: Journal Article
• Language: English
• Published: 03-09-2015
• Subjects: Physics - Physics and Society; Quantitative Finance - General Finance
• DOI: 10.48550/arxiv.1509.01483

We propose a simple dynamical model of the formation of production networks
among monopolistically competitive firms. The model subsumes the standard
general equilibrium approach \`a 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.