Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73701
Authors: 
Sülzle, Kai
Year of Publication: 
2005
Series/Report no.: 
Ifo Working Paper 22
Abstract: 
This paper studies a spatial model of electronic business network formation where firms build links based on a cost-benefit analysis. Benefits result from directly and indirectly connected firms in terms of knowledge flows, which are heterogeneous: a “key-player”(e.g. a firm providing an exchange platform in a business-to-business network) provides a higher level of knowledge flows than “peripheral” firms (e.g. tier 3 suppliers in a vertically differentiated industry). For intermediate cost values of link formation, stable andefficient network structures comprise only a subset of the total set of firms, excluding peripheral firms which are most distantly located to the key player. When link formation implies a certain degree of network congestion, the stable and efficient network size issmaller than in a model with bilateral decisions upon link formation between two firms.
Subjects: 
Network formation
business-to-business
spatial model
JEL: 
C70
D85
L22
Document Type: 
Working Paper

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