Social network structure and status competition

Michael Alexeev and Yao-Yu Chih

Canadian Journal of Economics, 2015, vol. 48, issue 1, 64-82

Abstract: In status competition studies, the utility of heterogeneous individuals typically depends on an economy-wide average indicator of status. In our model, emulative and jealous agents are embedded in an exogenous network where agent-specific reference group is determined by the direct link emanating from the agent. Similarly to Ghiglino and Goyal (2010) but in a somewhat different framework, we show that individual consumption is proportional to the agent's outbound Katz-Bonacich network centrality measure and equilibrium is generally inefficient. More important, the negative externality associated with each agent depends on her inbound centrality measurethe conspicuousness index. A tax based on this index combined with a uniform lump-sum transfer attains efficiency.

JEL-codes: D11 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (5)

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