Under-connected and Over-connected Networks

Tim Hellmann and Berno Buechel
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Berno Buechel: Bielefeld University
Authors registered in the RePEc Author Service: Berno Büchel

No 2009.38, Working Papers from Fondazione Eni Enrico Mattei

Abstract: Since the seminal contribution of Jackson & Wolinsky 1996 [A Strategic Model of Social and Economic Networks, JET 71, 44-74] it has been widely acknowledged that the formation of social networks exhibits a general conflict between individual strategic behavior and collective outcome. What has not been studied systematically are the sources of inefficiency. We approach this omission by analyzing the role of positive and negative externalities of link formation. This yields general results that relate situations of positive externalities with stable networks that cannot be “too dense” in a well-defined sense, while situations with negative externalities tend to induce “too dense” networks.

Keywords: Networks; Network Formation; Connections; Game Theory; Externalities; Spillovers; Stability; Efficiency (search for similar items in EconPapers)
JEL-codes: C72 D85 L14 (search for similar items in EconPapers)
Date: 2009-05
New Economics Papers: this item is included in nep-gth, nep-net, nep-soc and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Under-connected and over-connected networks: the role of externalities in strategic network formation (2012)
Working Paper: Under-connected and over-connected networks (2011)
Working Paper: Under-connected and Over-connected Networks (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2009.38

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