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An Econometric Model of Network Formation with an Application to Board Interlocks between Firms

Gualdani, Cristina (2019) An Econometric Model of Network Formation with an Application to Board Interlocks between Firms. Journal of Econometrics. (In Press)

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We study identification of the players’ preferences in a network formation game featuring complete information, nonreciprocal links, and a spillover effect. We decompose the network formation game into local games such that the network formation game is in equilibrium if and only if each local game is in equilibrium. This decomposition helps us prove equilibrium existence, reduce the number of moment inequalities characterising the identified set, and simplify the calculation of the integrals
entering those moment inequalities. The developed methodology is used to investigate Italian firms’ incentives for having their executive directors sitting on competitors’ boards.

Item Type: Article
Language: English
Date: 2019
Refereed: Yes
Uncontrolled Keywords: network formation, multiple equilibria, partial identification,, board interlocks.
JEL Classification: D85 - Network Formation and Analysis - Theory
G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
L22 - Firm Organization and Market Structure - Markets vs. Hierarchies; Vertical Integration; Conglomerates; Subsidiaries
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 29 Aug 2019 13:52
Last Modified: 29 Aug 2019 13:52
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