Stability in a network economy

The role of institutions

Pieter Ruys, E.A. Lazarova, R.P. Gilles

Research output: Contribution to journalArticleScientificpeer-review

Abstract

We consider an economy in which agents are embedded in a network of potential valuegenerating relationships. Agents are assumed to be able to participate in three types of economic interactions: Autarkic self-provision; bilateral interaction; and multilateral collaboration through endogenously provided platforms. We introduce two stability concepts and provide sufficient and necessary conditions on the network structure that guarantee existence, in cases ofthe absence of externalities, linkbased externalities and crowding externalities. We show that institutional arrangements based on socioeconomic roles and leadership guarantee stability. In particular, the stability of more complex economic outcomes requires more strict and complex institutional rules
to govern economic interactions. We investigate strict social hierarchies, tiered leadership structures and global market places.
Original languageEnglish
Pages (from-to)375-399
Number of pages25
JournalJournal of Economic Behavior & Organization
Volume119
DOIs
Publication statusPublished - Nov 2015

Fingerprint

Economics
Externalities
Interaction
Guarantee
Socio-economics
Network structure
Crowding
Global market
Bilateral
Institutional arrangements

Keywords

  • Network economies
  • Bilateral and multilateral interaction
  • Stable outcomes
  • Institutional stability

Cite this

@article{f6152cd446cd4351837eeed50964edf0,
title = "Stability in a network economy: The role of institutions",
abstract = "We consider an economy in which agents are embedded in a network of potential valuegenerating relationships. Agents are assumed to be able to participate in three types of economic interactions: Autarkic self-provision; bilateral interaction; and multilateral collaboration through endogenously provided platforms. We introduce two stability concepts and provide sufficient and necessary conditions on the network structure that guarantee existence, in cases ofthe absence of externalities, linkbased externalities and crowding externalities. We show that institutional arrangements based on socioeconomic roles and leadership guarantee stability. In particular, the stability of more complex economic outcomes requires more strict and complex institutional rulesto govern economic interactions. We investigate strict social hierarchies, tiered leadership structures and global market places.",
keywords = "Network economies, Bilateral and multilateral interaction, Stable outcomes, Institutional stability",
author = "Pieter Ruys and E.A. Lazarova and R.P. Gilles",
year = "2015",
month = "11",
doi = "10.1016/j.jebo.2015.09.011",
language = "English",
volume = "119",
pages = "375--399",
journal = "Journal of Economic Behavior & Organization",
issn = "0167-2681",
publisher = "Elsevier Science BV",

}

Stability in a network economy : The role of institutions. / Ruys, Pieter; Lazarova, E.A.; Gilles, R.P.

In: Journal of Economic Behavior & Organization, Vol. 119, 11.2015, p. 375-399.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Stability in a network economy

T2 - The role of institutions

AU - Ruys, Pieter

AU - Lazarova, E.A.

AU - Gilles, R.P.

PY - 2015/11

Y1 - 2015/11

N2 - We consider an economy in which agents are embedded in a network of potential valuegenerating relationships. Agents are assumed to be able to participate in three types of economic interactions: Autarkic self-provision; bilateral interaction; and multilateral collaboration through endogenously provided platforms. We introduce two stability concepts and provide sufficient and necessary conditions on the network structure that guarantee existence, in cases ofthe absence of externalities, linkbased externalities and crowding externalities. We show that institutional arrangements based on socioeconomic roles and leadership guarantee stability. In particular, the stability of more complex economic outcomes requires more strict and complex institutional rulesto govern economic interactions. We investigate strict social hierarchies, tiered leadership structures and global market places.

AB - We consider an economy in which agents are embedded in a network of potential valuegenerating relationships. Agents are assumed to be able to participate in three types of economic interactions: Autarkic self-provision; bilateral interaction; and multilateral collaboration through endogenously provided platforms. We introduce two stability concepts and provide sufficient and necessary conditions on the network structure that guarantee existence, in cases ofthe absence of externalities, linkbased externalities and crowding externalities. We show that institutional arrangements based on socioeconomic roles and leadership guarantee stability. In particular, the stability of more complex economic outcomes requires more strict and complex institutional rulesto govern economic interactions. We investigate strict social hierarchies, tiered leadership structures and global market places.

KW - Network economies

KW - Bilateral and multilateral interaction

KW - Stable outcomes

KW - Institutional stability

U2 - 10.1016/j.jebo.2015.09.011

DO - 10.1016/j.jebo.2015.09.011

M3 - Article

VL - 119

SP - 375

EP - 399

JO - Journal of Economic Behavior & Organization

JF - Journal of Economic Behavior & Organization

SN - 0167-2681

ER -