Abstract
This paper presents a simple model of strategic network formation with local com-
plementarities in eort levels and positive local externalities. Equilibrium networks display - other than the complete and the empty network - a core-periphery structure, which is commonly observed in empirical studies. Ex-ante homogenous agents may obtain very dierent ex-post outcomes. These ndings are relevant for a wide range of social and economic phenomena, such as educational attainment, criminal activity, labor market participation and R&D expenditures of rms.
plementarities in eort levels and positive local externalities. Equilibrium networks display - other than the complete and the empty network - a core-periphery structure, which is commonly observed in empirical studies. Ex-ante homogenous agents may obtain very dierent ex-post outcomes. These ndings are relevant for a wide range of social and economic phenomena, such as educational attainment, criminal activity, labor market participation and R&D expenditures of rms.
| Original language | English |
|---|---|
| Place of Publication | Bristol |
| Publisher | University of Bristol |
| Number of pages | 26 |
| Publication status | Published - 1 Nov 2012 |
Publication series
| Name | Bristol Economics Working Papers |
|---|---|
| No. | 12/633 |
Keywords
- Network formation
- peer effects
- strategic complements
- positive externalities