Externalities in Exchange Networks

Jacob Dijkstra
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Jacob Dijkstra: Interuniversity Centre for Social Science Theory and Methodology (ICS) in Groningen, the Netherlands, j.dijkstra@rug.nl

Rationality and Society, 2009, vol. 21, issue 4, 395-427

Abstract: The present paper extends the focus of network exchange research to externalities in exchange networks. Externalities of exchange are defined as direct effects on an actor’s utility, of an exchange in which this actor is not involved. Existing theories in the field of network exchange do not inform us on how externalities are predicted to affect behavior in exchange networks. Three prominent theories in the field, core theory, power dependence theory and exchange resistance theory, are extended to exchange networks with externalities, allowing three main conclusions about the expected effects of externalities in exchange networks: externalities (i) change actors’ payoffs, (ii) change the exchange pattern, and (iii) change the power distribution across actors. The investigated theories yield predictions concerning the occurrence and magnitude of these effects. A method is proposed to separate the effect of (i) the network, (ii) the externalities, and (iii) the interaction between network and externalities.

Keywords: core; exchange networks; exchange resistance; externalities; power dependence (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:ratsoc:v:21:y:2009:i:4:p:395-427

DOI: 10.1177/1043463109335612

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