Networks, Markets, and Inequality: Comment
17 Pages Posted: 11 Feb 2019
Date Written: January 31, 2019
Gagnon and Goyal (2017) develop an elegant network game model to explore the interaction between markets and networks, a central theme in social sciences. This comment corrects two technical mistakes of their paper. The first mistake is about a characterization of the maximal equilibrium in two interesting cases. We correct this mistake and provide a unified characterization. The second mistake is the missing of a crucial assumption on the independence of three basic ingredients of the model, without which several results of the comparative statics would be problematic. We also provide a more systematic comparative statics with the help of the theory of games with strategic complements.
Keywords: complelments, substitutes, network, market, games with strategic complements
JEL Classification: D63, D85, J15, L82, O15, Z13, Z31
Suggested Citation: Suggested Citation