Assortative matching with network spillovers

• 成果类型: Article
• 署名作者: Bjerre-Nielsen, Andreas
• 署名单位: University of Copenhagen
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2020.1050280022
• 发表日期: 2020
• 关键词: Network formation; Under-connectivity; assortative matching; network externalities; One-sided matching

摘要

This paper investigates endogenous network formation by heterogeneous agents. The agents' types determine the value of linking and we incorporate spillovers as utility from indirect connections. We provide sufficient conditions for a class of networks with sorting to be stable for low to moderate spillovers; with only two types these networks are the unique pairwise stable ones. We also show that this sorting is suboptimal for moderate to high spillovers despite otherwise obeying the conditions for sorting in Becker (1973). This shows that in our sorted networks a tension between stability and efficiency is present. We analyze a policy tool to mitigate suboptimal sorting. (C) 2020 Elsevier Inc. All rights reserved.