We study the \textsc{Labeled Contractibility} problem, where the input consists of two vertex-labeled graphs $G$ and $H$, and the goal is to determine whether $H$ can be obtained from $G$ via a sequence of edge contractions. Lafond and Marchand~[WADS 2025] initiated the parameterized complexity study of this problem, showing it to be \(\W[1]\)-hard when parameterized by the number \(k\) of allowed contractions. They also proved that the problem is fixed-parameter tractable when parameterized by the tree-width \(\tw\) of \(G\), via an application of Courcelle's theorem resulting in a non-constructive algorithm. In this work, we present a constructive fixed-parameter algorithm for \textsc{Labeled Contractibility} with running time \(2^{\mathcal{O}(\tw^2)} \cdot |V(G)|^{\mathcal{O}(1)}\). We also prove that unless the Exponential Time Hypothesis (\ETH) fails, it does not admit an algorithm running in time \(2^{o(\tw^2)} \cdot |V(G)|^{\mathcal{O}(1)}\). This result adds \textsc{Labeled Contractibility} to a small list of problems that admit such a lower bound and matching algorithm. We further strengthen existing hardness results by showing that the problem remains \NP-complete even when both input graphs have bounded maximum degree. We also investigate parameterizations by \((k + \delta(G))\) where \(\delta(G)\) denotes the degeneracy of \(G\), and rule out the existence of subexponential-time algorithms. This answers question raised in Lafond and Marchand~[WADS 2025]. We additionally provide an improved \FPT\ algorithm with better dependence on \((k + \delta(G))\) than previously known. Finally, we analyze a brute-force algorithm for \textsc{Labeled Contractibility} with running time \(|V(H)|^{\mathcal{O}(|V(G)|)}\), and show that this running time is optimal under \ETH.
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