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Networks of Relations

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  • Giancarlo Spagnolo
  • Steffen Lippert

Abstract

In this paper, we model networks of relational contracts. We explore sanctioning power within these networks under different information technologies depending on the shape of the network. The value of the relational network lies in the enforcement of cooperative agreements which would not be enforceable for the agents without access to the punishment power of other network members. We identify conditions for stability of such networks, conditions for transmission of information about past actions, and conditions under which self-sustainable subnetworks may actually inhibit a stable network

Suggested Citation

  • Giancarlo Spagnolo & Steffen Lippert, 2004. "Networks of Relations," Econometric Society 2004 North American Winter Meetings 496, Econometric Society.
    • Handle: RePEc:ecm:nawm04:496
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    More about this item

    Keywords

    Networks; Relational Contracts; Collusion; Social Capital;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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    1. Socio-Economics of Innovation

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