American Economic Review Vol. 107 No. 1 2017

Networks, Markets, and Inequality

Julien Gagnon¹; Sanjeev Goyal²

¹ Faculty of Economics and Trinity College, University of Cambridge, The Austin Robinson Building, Sidgwick Ave., Cambridge CB3 9DD (e-mail: ) · ² Faculty of Economics and Christ’s College, University of Cambridge, The Austin Robinson Building, Sidgwick Ave., Cambridge CB3 9DD (e-mail: )

Abstract

The interaction between community and markets remains a central theme in the social sciences. The empirical evidence is rich: in some instances, markets strengthen social ties, while in others they undermine them. The impact of markets on inequality and welfare also varies widely. This paper develops a model where individuals in a social network choose whether to participate in their network and whether to participate in the market. We show that individual behavior is defined by the q-core of the network and the key to understanding the conflicting evidence is whether the market and the network are complements or substitutes.

DOI

10.1257/aer.20150635

Volume

107

Issue

1

Pages

1-30

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

APA 7 MLA 9 Chicago (author–date) Harvard Elsevier Harvard (JFE, JBF…) The Accounting Review Academy of Management American Marketing Association INFORMS (Management Science) Copy citation Copied ✓