Trade Networks and the Strength of Strong Ties

Aureo de Paula

A chapter in The Econometrics of Networks, 2020, vol. 42, pp 83-110 from Emerald Group Publishing Limited

Abstract: Evidence suggests that, in the presence of imperfect market institutions, individuals devote resources to the establishment of reliable connections to attenuate the frictions that reduce trading and insurance opportunities. In this chapter, the author surveys the relevant literature on strategic formation of networks and use it to study this particular economic situation. A simple model is built to show that the investment in strong ties often, though not always, produces stable configurations that manage to improve upon the imperfections of market institutions.

Keywords: C70; D20 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eme:aecozz:s0731-905320200000042009

DOI: 10.1108/S0731-905320200000042009

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