Relation and Network Externality Based on Asymmetric Interest Flow Theory with the Case of Health Damage Caused by PPV's Energy Consumption

The study starts with a logical reasoning: if the network is composed of individuals and their relations, the network externality should also have a micro foundation. However, the traditional network externality or network effects theory does not indicate the specific meaning of individual nor relation externalities. Therefore, the study first defines the relation and its decisive characteristic: the interaction of interest flow. Furthermore, it is pointed out that the asymmetric interest flow is the essential feature of externality. Then, with the help of flow analysis in graph theory, the mathematical models of potential relation, relation and relation externality are given. Based on the definition of individual externality on the net, a new interpretation of network externality compared with traditional one is given, which is the state set of individual externalities on the net. Finally, we use these definitions to give a new explanation to a specific case in energy and environmental field and supply a new framework to solve general or concrete externality problems.