Networks of Relations

Steffen Lippert () and Giancarlo Spagnolo

No 28, Discussion Papers from SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: We model networks of relational (or implicit) contracts, exploring how sanctioning power and equilibrium conditions change under different network configurations and information transmission technologies. In our model, relations are the links, and the value of the network lies in its ability to enforce cooperative agreements that could not be sustained if agents had no access to other network members' sanctioning power and information. We identify conditions for network stability and in-network information transmission as well as conditions under which stable subnetworks inhibit more valuable larger networks.

Keywords: Networks; Relational Contracts; Indirect Multimarket Contact; Social Capital. (search for similar items in EconPapers)
JEL-codes: L13 L29 D23 D43 O17 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic, nep-net and nep-soc
Date: 2004-11
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Related works:
Working Paper: Networks of Relations (2004)
Working Paper: Networks of Relations (2005)
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