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Editor: Universidad Carlos III de Madrid. Departamento de Economía

Issued date: 2007-02

ISSN: 2340-5031

Serie-No.: UC3M Working papers. Economics;07-11

Keywords: Random network , Spillovers , Network formation , Network topology

Rights: Atribución-NoComercial-SinDerivadas 3.0 España

Abstract:The aim of this paper is to understand the interactions between productive effort and thecreation of synergies that are the sources of technological collaboration agreements,agglomeration, social stratification, etc. We model this interaction in a way thatThe aim of this paper is to understand the interactions between productive effort and thecreation of synergies that are the sources of technological collaboration agreements,agglomeration, social stratification, etc. We model this interaction in a way that allowsus to characterize how agents devote resources to both activities. This permits a fullfledgedequilibrium-welfare analysis of network formation with endogenous investmentefforts and to derive unambiguous comparative statics results. In spite of its parsimonythat ensures tractability, the model retains enough richness to replicate a (relatively)broad range of empirical regularities displayed by social and economic networks, and isdirectly estimable to recover is structural parameters.+-





Author: Cabrales, Antonio; Calvó-Armengol, Antoni; Zenou, Yves

Source: http://e-archivo.uc3m.es


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Universidad Carlos III de Madrid Repositorio institucional e-Archivo http:--e-archivo.uc3m.es Departamento de Economía DE - Working Papers.
Economics.
WE 2007-02 Effort and synergies in network formation Cabrales, Antonio http:--hdl.handle.net-10016-676 Descargado de e-Archivo, repositorio institucional de la Universidad Carlos III de Madrid Working Paper 07-21 Economic Series 11 February 2007 Departamento de Economía Universidad Carlos III de Madrid Calle Madrid, 126 28903 Getafe (Spain) Fax (34-91) 6249875 EFFORT AND SYNERGIES IN NETWORK FORMATION∗ Antonio Cabrales†, Antoni Calvó-Armengol‡and Yves Zenou§ Abstract The aim of this paper is to understand the interactions between productive effort and the creation of synergies that are the sources of technological collaboration agreements, agglomeration, social stratification, etc.
We model this interaction in a way that allows us to characterize how agents devote resources to both activities.
This permits a fullfledged equilibrium-welfare analysis of network formation with endogenous investment efforts and to derive unambiguous comparative statics results.
In spite of its parsimony that ensures tractability, the model retains enough richness to replicate a (relatively) broad range of empirical regularities displayed by social and economic networks, and is directly estimable to recover is structural parameters. Keywords: random network, spillovers, network JEL Classification: L22, L51, O31, O38 ∗ formation, network topology. Sébastien Bervoets provided excellent research assistance.
We are also grateful to Eleonora Patacchini for her help with the AddHealth database, and to Daron Acemoglu, Luis Cabral, Glenn Ellison, Drew Fudenberg, George Mailath, Joan de Martí and Fernando Vega-Redondo for their comments and to seminar audiences at Universitat Autònoma de Barcelona, Universitat Pompeu Fabra, Universidad Carlos III, Università ca’Foscari di Venezia, Harvard-MIT and Yale. † Universid...





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