Stability in a network economy: The role of institutions

Gilles, Robert, Lazarova, Emiliya ORCID: https://orcid.org/0000-0002-7178-0644 and Ruys, Pieter (2015) Stability in a network economy: The role of institutions. Journal of Economic Behavior and Organization, 119. 375–399.

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Abstract

We consider an economy in which agents are embedded in a network of potential value-generating 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 of the absence of externalities, link-based 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.

Item Type:	Article
Uncontrolled Keywords:	network economies,bilateral and multilateral interaction,stable outcomes,institutional stability
Faculty \ School:	Faculty of Social Sciences > School of Economics
UEA Research Groups:	Faculty of Social Sciences > Research Groups > Applied Econometrics And Finance Faculty of Social Sciences > Research Groups > Economic Theory
Depositing User:	Pure Connector
Date Deposited:	22 Oct 2015 14:04
Last Modified:	21 Oct 2022 01:13
URI:	https://ueaeprints.uea.ac.uk/id/eprint/54784
DOI:	10.1016/j.jebo.2015.09.011

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