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The formation of networks with transfers among players

Bloch, Francis and Jackson, Matthew O. (2007) The formation of networks with transfers among players. Journal of Economic Theory, 133 (1). pp. 83-110. ISSN 0022-0531. doi:10.1016/j.jet.2005.10.003.

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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 game: (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.

Item Type:Article
Related URLs:
Jackson, Matthew O.0000-0001-9846-4249
Additional Information:© 2007 Elsevier. Received 5 January 2005. Available online 18 January 2006. Financial support from the Lee Center for Advanced Networking, the Guggenheim Foundation, the Center for Advanced Studies in the Behavioral Sciences, and from the NSF under grant SES.0316493 is gratefully acknowledged. We thank Anke Gerber and the participants of the Ninth Coalition Theory Network Workshop for a helpful discussion of the paper, and Toni Calvo-Armengol, an associate editor, and a referee for comments on earlier drafts.
Funding AgencyGrant Number
Caltech Lee Center for Advanced NetworkingUNSPECIFIED
Guggenheim FoundationUNSPECIFIED
Center for Advanced Studies in the Behavioral SciencesSES.0316493
Subject Keywords:networks; network games; network formation; game theory; efficient networks; side payments; transfers; bargaining; externalities
Issue or Number:1
Classification Code:JEL Classification Numbers: A14, C71, C72
Record Number:CaltechAUTHORS:20100909-135544784
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:19852
Deposited By: Tony Diaz
Deposited On:10 Sep 2010 03:11
Last Modified:08 Nov 2021 23:55

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