Bloch, Francis and Jackson, Matthew O. (2007) The formation of networks with transfers among players. Journal of Economic Theory, Vol.133 (No.1). pp. 83-110. doi:10.1016/j.jet.2005.10.003

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Abstract

We examine the formation of networks among a set of players whose payoffs depend on the structure of the network, when players may bargain by promising or demanding transfer payments when forming links. We vary three aspects of the came: (i) whether players can only make transfers to (and receive transfers from) players to whom they are directly linked, or whether they can also subsidize links that they are not directly involved in, (ii) whether or not transfers relating to a given link can be made contingent on the full resulting network or only on the link itself, and (iii) whether or not players can pay other players to refrain from forming links. We characterize the networks that are supported under these variations and show how each of the above aspects either accounts for a specific type of externality, or deals with the combinatorial nature of network payoffs. (c) 2005 Elsevier Inc. All rights reserved.

Item Type:	Journal Article
Subjects:	H Social Sciences > HC Economic History and Conditions
Divisions:	Faculty of Social Sciences > Economics
Journal or Publication Title:	Journal of Economic Theory
Publisher:	Academic Press
ISSN:	0022-0531
Official Date:	March 2007
Dates:	Date Event March 2007 Published
Volume:	Vol.133
Number:	No.1
Number of Pages:	28
Page Range:	pp. 83-110
DOI:	10.1016/j.jet.2005.10.003
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access

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