Overcoming the coordination problem: Dynamic formation of networks

Jack Ochs and In-Uck Park

Journal of Economic Theory, 2010, vol. 145, issue 2, 689-720

Abstract: We analyze a multi-period entry game among privately informed agents who differ with respect to the number of agents who must enter in order for their own entry to be profitable. In each period agents who have not yet joined decide whether to subscribe to a network. There exists a unique equilibrium that approximates any symmetric equilibrium arbitrarily closely as the discount factor approaches one. This resolves the coordination problem. Ex-post efficiency is necessarily achieved asymptotically as the population size grows large. These results do not hold if subscribers can reverse their decisions without cost.

Keywords: Strategic; complementarity; Network; externality; Coordination (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022-0531(09)00148-3
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Overcoming the Coordination Problem: Dynamic Formation of Networks (2005)
Working Paper: Overcoming the Coordination Problem: Dynamic Formation of Networks (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:145:y:2010:i:2:p:689-720

Access Statistics for this article

Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell

More articles in Journal of Economic Theory from Elsevier
Bibliographic data for series maintained by Catherine Liu ().