Complex Sciences. Second International Conference, COMPLEX 2012, Santa Fe, NM, USA, December 5-7, 2012, Revised Selected Papers

Research Article

To Trade or Not to Trade: Analyzing How Perturbations Travel in Sparsely Connected Networks

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  • @INPROCEEDINGS{10.1007/978-3-319-03473-7_17,
        author={Marshall Kuypers and Walter Beyeler and Matthew Antognoli and Michael Mitchell and Robert Glass},
        title={To Trade or Not to Trade: Analyzing How Perturbations Travel in Sparsely Connected Networks},
        proceedings={Complex Sciences. Second International Conference, COMPLEX 2012, Santa Fe, NM, USA, December 5-7, 2012, Revised Selected Papers},
        proceedings_a={COMPLEX},
        year={2013},
        month={11},
        keywords={Complex adaptive systems Agent-based model Trade International markets Perturbations Industry protection},
        doi={10.1007/978-3-319-03473-7_17}
    }
    
  • Marshall Kuypers
    Walter Beyeler
    Matthew Antognoli
    Michael Mitchell
    Robert Glass
    Year: 2013
    To Trade or Not to Trade: Analyzing How Perturbations Travel in Sparsely Connected Networks
    COMPLEX
    Springer
    DOI: 10.1007/978-3-319-03473-7_17
Marshall Kuypers,*, Walter Beyeler1,*, Matthew Antognoli,*, Michael Mitchell1,*, Robert Glass1,*
  • 1: Sandia National Laboratories
*Contact email: mkuyper@sandia.gov, webeyel@sandia.gov, mantogn@sandia.gov, micmitc@sandia.gov, rjglass@sandia.gov

Abstract

In global economics, nations are often faced with the opportunity to open or close new avenues of trade or to join new markets. These actions can be beneficial or harmful for a nation because entering a market exposes that nation to the perturbations caused by others in the market. However, joining a new market offers the benefit of lower prices and increased security against domestic perturbations because shocks are spread across all trading partners. This risk/benefit tradeoff is relatively straightforward for one market, but the effects are more complicated when multiple markets are introduced. We use an agent-based model to analyze how the connection pattern of markets affects perturbations that travel across networks. We find that shocks are not easily transmitted across networks unless the perturbed resource is directly traded and we discuss the tradeoffs associated with opening new international market connections.