An Econometric Model of Network Formation with an Application to Board Interlocks between Firms

Cristina Gualdani
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Cristina Gualdani: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: We study identification of the players' preferences in a network formation game featuring complete information, nonreciprocal links, and a spillover effect. We decompose the network formation game into local games such that the network formation game is in equilibrium if and only if each local game is in equilibrium. This decomposition helps us prove equilibrium existence, reduce the number of moment inequalities characterising the identified set, and simplify the calculation of the integrals entering those moment inequalities. The developed methodology is used to investigate Italian firms' incentives for having their executive directors sitting on competitors' boards.

Keywords: Network formation; Multiple equilibria; Partial identification; Board interlocks (search for similar items in EconPapers)
Date: 2021-10
New Economics Papers: this item is included in nep-com and nep-net
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Published in Journal of Econometrics, 2021, 224 (2), pp.345-370. ⟨10.1016/j.jeconom.2019.08.015⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03548907

DOI: 10.1016/j.jeconom.2019.08.015

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