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http://ssrn.com/abstract=716522
 
 

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Networks of Relations and Social Capital


Steffen Lippert


University of Otago - School of Business - Department of Economics

Giancarlo Spagnolo


Stockholm School of Economics (SITE)

May 5, 2005

SSE/EFI Economics and Finance Working Paper No. 570

Abstract:     
We model networks of relational (or implicit) contracts, exploring how sanctioning power and equilibrium conditions change under different network configurations and information transmission technologies. In our model relations are the links, and the value of the network lies in its ability to enforce cooperative agreements that could not be sustained if agents had no access to other network members' sanctioning power and information. We identify conditions for network stability and in-network information transmission as well as conditions under which stable subnetworks inhibit more valuable larger networks. The model provides formal definitions for individual and communities' "social capital" in the spirit of Coleman and Putnam.

Number of Pages in PDF File: 46

Keywords: Networks, Relational Contracts, Implicit Contracts, Industrial Districts, Indirect Multimarket Contact, Cooperation, Collusion, Social Capital, Social Relations, Embeddedness, End-Network Effect, Peering Agreements

JEL Classification: L13, L29, D23, D43, O17

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Date posted: May 6, 2005  

Suggested Citation

Lippert, Steffen and Spagnolo, Giancarlo, Networks of Relations and Social Capital (May 5, 2005). SSE/EFI Economics and Finance Working Paper No. 570. Available at SSRN: http://ssrn.com/abstract=716522 or http://dx.doi.org/10.2139/ssrn.716522

Contact Information

Steffen Lippert (Contact Author)
University of Otago - School of Business - Department of Economics ( email )
PO Box 56
Dunedin
New Zealand
Giancarlo Spagnolo
Stockholm School of Economics (SITE) ( email )
P.O. Box 6501
Stockholm
Sweden
HOME PAGE: http://https://sites.google.com/site/giancarlospagnoloshomepage/
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