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On the emergence of scale-free production networks

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Article
Author/s: 
Stanislao Gualdi, Antoine Mandel
Journal of Economic Dynamics and Control
Issue number: 
Volume 73, December 2016
Publisher: 
Elsevier
Year: 
2017
Journal pages: 
61-77
We propose a simple dynamical model for 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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