nep-net New Economics Papers
on Network Economics
Issue of 2009‒04‒25
four papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Contractually stable networks By Jean-Franois, CAULIER; Ana, MAULEON; Vincent, VANNETELBOSCH
  2. Double-Sided Externalities and Vertical Contracting : Evidence from European Franchising Data By Magali Chaudey; Muriel Fadairo
  3. Interviewing in Two-Sided Matching Markets By Robin S. Lee; Michael Schwarz
  4. An Almost Ideal Sharing Scheme for Coalition Games with Externalities By Finus, Michael; Eyckmans, Johan

  1. By: Jean-Franois, CAULIER; Ana, MAULEON; Vincent, VANNETELBOSCH (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)
    Abstract: We develop a theoretical framework that allows us to study which bilateral links and coalition structures are going to emerge at equilibrium. We define the notion of coalitional network to represent a network and a coalition structure, whre the network specifies the natyure of the relationship each individual has with his coalition members and with individuals outside his coalition. To predict the coalitional networks that are going to emerge at equiibrium we propose the concept of contractual stability which requires that any change made to the coalitional network needs the consent of both the deviating players and their original coalition partners. We show that there always exists a contractually stable coalitional network under the simple majority decision rule and the component-wise egalitarian or majoritarian allocation rules. Moreover, requiring the consent of group members may help to reconcile stability and efficiency
    Keywords: Networks; coaliation structures; contractual stability; allocation rules
    JEL: A14 C70
    Date: 2008–11–02
  2. By: Magali Chaudey (CREUSET - Centre de Recherche Economique de l'Université de Saint-Etienne - CNRS : FRE2938 - Université Jean Monnet - Saint-Etienne); Muriel Fadairo (CREUSET - Centre de Recherche Economique de l'Université de Saint-Etienne - CNRS : FRE2938 - Université Jean Monnet - Saint-Etienne)
    Abstract: This paper deals with contractual design and vertical relationships within a franchise chain, in the field of the literature on share contracts. Within a double-sided moral hazard, the contract sharing the profit generated by the vertical decentralized structure results from the necessity to incite both the franchisee and the franchisor. This paper takes into account the five franchisor incentive mechanisms in order to study the chosen type of vertical coordination in different contexts. Using a multinational European dataset, we provide evidence that the two-sided externalities and monitoring costs have an influence on the type of vertical coordination in the network
    Keywords: Agency theory; econometrics of contracting; vertical restraints
    Date: 2009–04–17
  3. By: Robin S. Lee; Michael Schwarz
    Abstract: We introduce the interview assignment problem, which generalizes the one-to-one matching model of Gale and Shapley (1962) by introducing a stage of costly information acquisition. Agents may learn preferences over partners via costly interviews. Although there exist multiple equilibria where all agents receive the same number of interviews, efficiency depends on overlap – the number of common interview partners among agents. We prove the equilibria with the highest degree of overlap yields the highest probability of being matched. The analysis suggests that institutions which ration interviews or create labor market segmentation may lead to greater efficiency in information acquisition activities.
    JEL: C78 D85 J01
    Date: 2009–04
  4. By: Finus, Michael; Eyckmans, Johan
    Abstract: Cooperative agreements among firms to coordinate R&D investments and share knowledge or coordination among nations to reduce trade barriers or to provide global public goods usually proves difficult due to free-rider incentives. In this paper, we propose a sharing scheme for the distribution of the gains from cooperation for games with externalities and heterogeneous players in order to mitigate free-rider problems. We show that every sharing rule belonging to our scheme leads to the same set of stable coalitions which is never empty. This scheme is "almost ideal" because it stabilizes those coalitions generating the highest possible global worth among the set of all "potentially stable coalitions". Our Almost Ideal Sharing Scheme is particularly powerful for economic problems where outsiders benefit from the coalition's actions (positive externalities) and which therefore are likely to suffer from severe free-riding.
    Keywords: sharing schemes; externalities; partition function; coalition games
    Date: 2009–04

This nep-net issue is ©2009 by Yi-Nung Yang. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.