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Social Interactions and Spillovers: Incentives,Segregation and Topology

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  • Antonio Cabrales
  • Antoni Calvó-Armengol
  • 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, and social interactions. We model this interaction in a way that allows us to characterize how agents devote resources to both activities. This permits a full-edged equilibrium/welfare analysis of network formation with endogenous productive efforts, to derive unambiguous comparative statics results and to analyze community sorting by individual traits. In spite of its parsimony the model retains enough richness to replicate a broad range of empirical regularities displayed by social and economic networks, and to relate them to individual and social welfare. Key words: random network, spillovers, network formation, network topology.

Suggested Citation

  • Antonio Cabrales & Antoni Calvó-Armengol & Yves Zenou, 2009. "Social Interactions and Spillovers: Incentives,Segregation and Topology," Working Papers 2009-06, FEDEA.
  • Handle: RePEc:fda:fdaddt:2009-06
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    References listed on IDEAS

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    Cited by:

    1. Andrea Galeotti & Luca Paolo Merlino, 2014. "Endogenous Job Contact Networks," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(4), pages 1201-1226, November.
    2. Mohamed Belhaj & Frédéric Deroian, 2010. "Endogenous effort in communication networks under strategic complementarity," International Journal of Game Theory, Springer;Game Theory Society, vol. 39(3), pages 391-408, July.
    3. Kets, W., 2008. "Networks and learning in game theory," Other publications TiSEM 7713fce1-3131-498c-8c6f-3, Tilburg University, School of Economics and Management.

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    Keywords

    random network; spillovers; network formation; network topology.;
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