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on Network Economics |
| By: | Cabau, Noemie; Tenev, Anastas |
| Abstract: | We consider a model of network formation in which agents benefit from intermediation insofar as they are the only bridge between agents who would otherwise be unconnected. Their payoffs depend proportionally on their frequency as intermediaries. We analyze two types of payoffs: global, based on the intermediation across the whole network; and local, based on an agent’s perceived centrality in a subnetwork, measured within a fixed radius around the agent. These capture two measurements of network importance: objective and perceived (subjective). Agents have an incentive to form links so that they become key intermediaries in their (perceived) network and to bypass other key intermediaries in it. However, because payoffs are determined relative to other agents’ contributions, an agent might refrain from forming links if this would expose them to relatively more essential players. In case agents’ payoffs are global, the pairwise stable networks are connected and have at most one (central) agent with a nonzero payoff. In the case where agents’ payoffs are local, we describe the pairwise stable networks and some characteristics of the individual payoffs within them. A class of networks we call augmented stars (stars in which spokes may be connected but no cycle encompasses all spokes) is pairwise stable for both global and all possible local payoffs. |
| Keywords: | social networks, structural holes, network formation, intermediation |
| JEL: | C72 D85 |
| Date: | 2026–08–31 |
| URL: | https://d.repec.org/n?u=RePEc:cvh:coecwp:2026/03 |
| By: | Kim Klyver (SDU - University of Southern Denmark = Syddansk Universitet); Mette Sogaard Nielsen (SDU - University of Southern Denmark = Syddansk Universitet); Mark T. Schenkel (Belmont University (United States, Nashville)); Tom Elfring (EM - EMLyon Business School) |
| Abstract: | This study examines how entrepreneurs' network agency enables the generation of resource-rich networks (network formation problem) and the mobilization of those available resources (network action problem) in a direct or indirect manner. We examine entrepreneurs' networking intensity and social skills as two components of network agency and develop a conceptual two-path model of resource mobilization. We empirically test this conceptual model using two waves of data collection from a national representative sample of nascent entrepreneurs (n = 457). We find important distinctions in the role networking intensity and social skills play for entrepreneurs' advice availability and advice mobilization, and thereby their propensity to solve, respectively, the network formation problem and the network action problem. Whereas networking intensity allows entrepreneurs to access new advice directly or build a network of potential advice, social skills are what enable them to successfully extract advice from those established connections. These new insights have implications for practice and for the theoretical understanding of network agency and resource mobilization. |
| Keywords: | Entrepreneur, Social skills, Resource mobilization, Networking intensity, Network agency |
| Date: | 2026–07–03 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05731792 |
| By: | Itai Arieli; Jo\~ao Correia-da-Silva; Wade Hann-Caruthers; Anna Rubinchik |
| Abstract: | We study a network formation game in which agents sponsor links at a linear cost in order to maximize centrality, defined as a weighted sum of walk counts with positive and weakly decreasing weights. This class includes Katz Bonacich centrality and total communicability and captures environments in which access decays with distance. Our main result is a sharp equilibrium characterization: every Nash equilibrium network is core periphery, meaning there exists a set $C$ such that every node is linked to every node in $C$, and there are no other edges. The driving force is that linking to better connected agents generates many additional short connections at once, so incentives concentrate links on a dense subset. Finally, we show that the welfare maximizing network is always either empty or complete. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.02357 |
| By: | Shinya Sugiura |
| Abstract: | We characterize the communication networks that ensure consensus in rational social learning under the sure-thing principle. A network ensures consensus if and only if it is pseudo-reciprocal, a property under which reciprocity may fail between individuals but holds at a coarser group level. Prior work has assumed message exchange to be bidirectional, yet such pairwise reciprocity proves largely dispensable. We show that a single bidirectional link can suffice, however large the population. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.22234 |
| By: | Julian Vedeler Johnsen (UiB - University of Bergen); Laura Khoury (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This paper provides direct evidence that shared incarceration can facilitate the formation of post-release criminal partnerships. Using Norwegian administrative data linking prison spells to police case identifiers, we measure network ties through subsequent co-offending. We exploit time-based variation in exposure within facilities by comparing inmate pairs in the same facility who differ only in whether their spells overlapped. Overlap is associated with a 37% increase in five-year co-offending relative to comparable non-overlapping pairs, robust to extensive controls and timing-based restrictions. Effects are stronger in environments and for pairs where interaction is plausibly more intense, highlighting network formation as a plausible mechanism. |
| Keywords: | Criminal networks, Criminal experience, Co-offending, Recidivism, Criminal behavior, Incarceration, Prison inmates |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05726614 |
| By: | Fan, Junwei (University of Glasgow); Montoya-Blandon, Santiago (University of Glasgow); Proto, Eugenio (University of Glasgow) |
| Abstract: | We examine how social comparison within endogenously formed peer networks affects different measures of young adult mental health. Using over 2 million smartphone-based communication records from the NetHealth Study, we construct objective social networks among university students and estimate a structural model in which individuals choose their peers and mental health depends on the income of chosen peers. When networks are treated as exogenous, higher average peer income predicts better mental health; once network formation is modelled endogenously, the relationship reverses: exposure to higher-income peers significantly worsens depressive symptoms. Income gaps harm mental health in both directions, consistent with inequality aversion rather than relative deprivation. The reversal survives extending binary links to message-weighted networks, and counterfactual exercises show that policies reducing the volume of messages exchanged with peers improve mental health, increasingly so with the size of the reduction, though the effect of targeted reductions depends on which ties are attenuated. Ignoring endogenous peer selection can thus yield qualitatively misleading conclusions about peer effects on mental health. |
| Keywords: | social networks, relative status, mental health, network formation |
| JEL: | D63 D85 D91 I14 I31 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18899 |
| By: | Brandon Joel Tan |
| Abstract: | Whether exporters can take advantage of increases in foreign demand depends on the scalability of their input suppliers—that is, suppliers’ ability to expand production when demand rises. Using bilateral trade data linked to international input-output tables, I measure supplier scalability at the country-industry level and examine how it shapes downstream export growth. I find that supplier scalability varies sharply across industries within countries, that scalable suppliers tend to be connected to scalable suppliers themselves, and that downstream country-sectors exposed to more scalable suppliers respond more strongly to positive foreign demand shocks in sectors with relationship-sticky inputs. I rationalize these facts in a multicountry, multi-sector general-equilibrium trade model with input-output linkages, heterogeneous upward-sloping supplier supply curves, and gradually adjusting sourcing relationships. In the calibrated model, supplier bottlenecks substantially attenuate the export and welfare gains from a global demand expansion, while relationship stickiness determines where bottlenecks bind. Counterfactuals show that supplier upgrading and pre-arranged access to flexible sourcing networks are most valuable when targeted toward economically central, relationship-sticky, and bottleneck-exposed parts of the production network. |
| Keywords: | Scalability; trade; production networks |
| Date: | 2026–08–28 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2026/183 |
| By: | Ying Bai; Ruixue Jia |
| Abstract: | Institutions that claim to reward merit often also serve as engines that drive the formation of important social networks. We examine this dual role in China’s Imperial Examination, one of history’s longest-lived meritocratic systems. We draw on exam performance data for 24, 269 individuals across 112 national examinations in the Qing dynasty (1644–1905) and trace who among them rose to become top officials. Strong exam performance increased the likelihood of attaining high office, but advancement also depended on individuals’ ties to powerful examiners. Because performance and ties to powerful examiners were strongly complementary, individuals’ success appeared to rest on merit even as social networks played a role. Following the major political transformations of the 1840s, the importance of examiner ties persisted, although the influential examiners themselves changed. These findings help explain why such systems retain legitimacy even when networks matter greatly. |
| JEL: | D73 D85 N45 Z13 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35556 |
| By: | Sahil Loomba; Dean Eckles |
| Abstract: | In the presence of interference, where the treatment assigned to one unit can affect the outcomes of others, many causal estimands depend on the treatment-assignment policy under which the experiment is conducted. This policy dependence creates a fundamental challenge for off-policy estimation, where the goal is to estimate causal quantities under a hypothetical intervention policy different from the one used to collect data. We study this problem of off-policy estimation of causal effects for heterogeneous Bernoulli policies. By representing exposure-weighted potential outcomes in the biased Fourier basis of the experimental design, we construct, for any prespecified Fourier subspace encoding the assumed interference structure, the unique minimum-$L^2$ weight that transports every function in that subspace. Global and local inverse-probability weights, linear-interference weights, and no-interference weights are special cases. The weight variance is a structured chi-square distance between the experiment and target policies. When the assumed interference structure is misspecified, the introduced bias couples the omitted outcome spectrum with the corresponding policy-shift coefficients, yielding a sharp robustness bound and a bias-variance trade-off. A Fourier-neighborhood-overlap condition gives consistency under structured interference, and we state a Doob-martingale central limit theorem for off-policy estimators. As the variance is not identified, we derive identifiable bounds and associated conservative estimators of the variance. Simulations illustrate these theoretical results for the design and analysis of experiments under network interference and design mismatch. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.02756 |
| By: | Gabriela Miyazato Szini |
| Abstract: | I develop an estimation and inference framework for distribution regression in dyadic network settings with two-way fixed effects that vary across thresholds of the outcome. I show that identification of the structural parameters is achieved through binarization of the outcome at each threshold, and estimate the model by conditional maximum likelihood, which "differences out" the fixed effects and circumvents the incidental parameter problem. The estimator remains asymptotically unbiased under sparsity, whether from the network structure or binarization at extreme thresholds. The second novelty is to establish the joint asymptotic distribution of the estimators across multiple thresholds with different convergence rates, and to develop simultaneous confidence bands and tests for equality of coefficients across thresholds. Monte Carlo simulations confirm small bias, valid inference, and correct simultaneous coverage under sparsity. An application to bilateral trade finds that coefficients vary substantially across the distribution, with equality rejected for key trade barriers. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.04983 |
| By: | Massoni, Hubert |
| Abstract: | Transportation infrastructure is vulnerable to extreme weather events. Vulnerability is prominent at maritime ports, where tropical cyclones frequently halt operations and force firms to adapt to transportation disruptions. I quantify these responses by linking high-frequency maritime shipment data to tropical cyclone tracks. Exposure to tropical cyclones temporarily disrupts port activities (1–2 weeks), prompting firms to reroute shipments to alternative ports (1–4 months), but this adaptation mechanism is insufficient to prevent persistent declines in firm-to-firm trade. To evaluate the general-equilibrium implications of these weather disruptions, I develop a quantitative model of spatial production networks with endogenous routing. Port-level transportation costs increase with traffic (congestion) and cyclone risk, and decrease with port capacity (scale). Investigating future climate hazards to the transportation network, I find that welfare effects are primarily distributional; congestion forces at ports account for most of the general-equilibrium absorption of the climate shock, while firm-level rerouting has limited effectiveness. To translate evidence into policy, I derive analytical sufficient statistics for evaluating and targeting future port investments in light of climate change. Allocation rules that ignore weather risk and firms' adaptive responses redistribute investment across ports, with distributional consequences. |
| Keywords: | International trade; transportation; extreme weather; climate change; port infrastructure; production networks |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpm:docweb:2602 |
| By: | Joseph Fry |
| Abstract: | Asymptotic normality approximations often fail to hold for extremum estimators when the true value of the parameter is at or close to the boundary of a parameter space. I analyze and develop tests using a quasi-unconstrained estimator, which is asymptotically normal even when the true parameter vector is near or at the boundary. These results generalize previous work with this estimator by allowing for more types of constraints and showing how the method can naturally be modified when a nuisance parameter is also high-dimensional. I show that variations of Wald, Likelihood Ratio, and Lagrange Multiplier tests can control size in a uniform sense, provided the initial constrained estimator is sufficiently accurate. Lastly, I apply the method to an application involving network estimation with panel data. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.22002 |