TY  - JOUR
AU  - Han, Chengyuan
AU  - Schröder, Malte
AU  - Witthaut, Dirk
AU  - Böttcher, Philipp C
TI  - Formation of trade networks by economies of scale and product differentiation
JO  - Journal of physics / Complexity
VL  - 4
IS  - 2
SN  - 2632-072X
CY  - Bristol
PB  - IOP Publ.
M1  - FZJ-2023-02706
SP  - 025006
PY  - 2023
AB  - Understanding the structure and formation of networks is a central topic in complexity science. Economic networks are formed by decisions of individual agents and thus not properly described by established random graph models. In this article, we establish a model for the emergence of trade networks that is based on rational decisions of individual agents. The model incorporates key drivers for the emergence of trade, comparative advantage and economic scale effects, but also the heterogeneity of agents and the transportation or transaction costs. Numerical simulations show three macroscopically different regimes of the emerging trade networks. Depending on the specific transportation costs and the heterogeneity of individual preferences, we find centralized production with a star-like trade network, distributed production with all-to-all trading or local production and no trade. Using methods from statistical mechanics, we provide an analytic theory of the transitions between these regimes and estimates for critical parameters values.
LB  - PUB:(DE-HGF)16
UR  - <Go to ISI:>//WOS:000974336100001
DO  - DOI:10.1088/2632-072X/acc91f
UR  - https://juser.fz-juelich.de/record/1009245
ER  -