Networks of Relations

Lippert, Steffen and Spagnolo, Giancarlo (November 2004): Networks of Relations. SFB/TR 15 Discussion Paper No. 28

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 subnetworks inhibit more valuable larger networks.

• Item Type: Paper
• Keywords: Networks, Relational Contracts, Indirect Multimarket Contact, Social Capital.
• Faculties: Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > C6 - Kommunikations- und Transporttechnologien, Industrie- und Regionalstruktur
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: L13, L29, D23, D43, O17
• Language: English