Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/43760 
Year of Publication: 
2008
Series/Report no.: 
Working Papers No. 400
Publisher: 
Bielefeld University, Institute of Mathematical Economics (IMW), Bielefeld
Abstract: 
Since the seminal contribution of Jackson & Wolinsky 1996 [A Strategic Model of Social and Economic Networks, JET 71, 44-74] it has been widely acknowledged that the formation of social networks exhibits a general conflict between individual strategic behavior and collective outcome. What has not been studied systematically are the sources of inefficiency. We approach this gap by analyzing the role of positive and negative externalities of link formation. We find general results that relate situations of positive externalities with stable networks that cannot be 'too dense' in a well-defined sense, while situations with negative externalities, tend to induce 'too dense' networks.
Subjects: 
Networks
Network formation
Connections
Game theory
Externalities
Spillovers
Stability
Efficiency
JEL: 
D85
C72
L14
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
317.09 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.