SSE/EFI Working Paper Series in Economics and Finance
Networks of Relations
() and Steffen Lippert
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.
Keywords: Networks; Relational Contracts; Peering; Indirect Multimarket Contact; Information transmission; Social Capital.; (follow links to similar papers)
JEL-Codes: D23; D43; L13; L29; O17; (follow links to similar papers)
43 pages, November 27, 2004, Revised June 4, 2010
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