. We approach this gap by analyzing the role of positive and negative externalities of link formation. We find general … results that relate situations of positive externalities with stable networks that cannot be 'too dense' in a well …-defined sense, while situations with negative externalities, tend to induce 'too dense' networks. …

This paper analyzes equlibrium and welfare for a tractable class of economies (games) with externalities, strategic … efficiency benchmark designed to address whether the equilibrium use of information is optimal from a social perspective; the … few applications, including production externalities, beauty contests, business cycles, and large Cournot and Bertrand …

large body of research demonstrates the power of “reciprocity” for inducing cooperation: When others know that you have … they think others are also cooperating; and people can develop habits of cooperation that shape their default inclinations …

international agreements as variations of the public-goods game, and examine the incentives for cooperation under each alternative … familiar from both the Kyoto and Copenhagen climate summits. Since cap-and-trade rules decrease cooperation by developing … targets. To break this deadlock and shift the equilibrium toward cooperation, a modification of the public-goods game based on …

externalities. An organization is defined as a group of agents, together with a set of bilateral relations, formally, a connected … graph. Because of the presence of externalities, the profitability of coalitional threats to an organization depend on the … externalities, while the fully connected organization emerges under negative. This result is shown to hold independently of the …

investigate the incentives to expend effort for a prize that produces consumption externalities and consider alternative … regulatory policies. We find relatively more global consumption externalities will increase (decrease) rent seeking when … consumption externalities are negative (positive). We show how introducing Pigouvian taxation (possibly with revenue transfer) and …

This paper studies infinite-horizon bargaining between a seller and multiple buyers when externalities are present. We … externalities. Since each buyer receives a positive payoff when the seller makes an agreement with some other buyer, positive … externalities induce a war of attrition between buyers. …

. Furthermore, since local interactions imply particular forms of externalities, their presence typically suggests government action …