Networks of Relations and Social Capital

Giancarlo Spagnolo and Steffen Lippert

No 5078, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 sub-networks inhibit more valuable larger networks. The model provides formal definitions for individual and communities? ?social capital? in the spirit of Coleman and Putnam.

Keywords: Networks; Relational contracts; Implicit contracts; Industrial districts; Indirect multimarket contact; Cooperation; Collusion; Social capital; Social relations; Embeddedness (search for similar items in EconPapers)
JEL-codes: D23 D43 L13 L29 O17 (search for similar items in EconPapers)
Date: 2005-05
New Economics Papers: this item is included in nep-net
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Networks of relations and Word-of-Mouth Communication (2011)
Working Paper: Networks of Relations (2010)
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