We introduce a spatial cost topology in the network formation model analyzed by Jackson and Wolinsky, Journal of Economic Theory 71 (1996), 44-74. This cost topology might represent geographical, social, or individual differences. It describes variable costs of establishing social network...

This paper generalizes the results of Suijs, De Waegenaere and Borm (1998) to arbitrary risks. It provides Pareto optimal allocations and shows that the zero utility premium calculation principle yields a core-allocation.