Article

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

Cristina Gualdani

Résumé

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.

Mots-clés

network formation; multiple equilibria; partial identification; board interlocks;

Codes JEL

  • D85: Network Formation and Analysis: Theory
  • C57: Econometrics of Games
  • L22: Firm Organization and Market Structure
  • G34: Mergers • Acquisitions • Restructuring • Corporate Governance

Remplace

Cristina Gualdani, « An Econometric Model of Network Formation with an Application to Board Interlocks between Firms », TSE Working Paper, n° 17-898, mars 2018, révision juillet 2019.

Référence

Cristina Gualdani, « An Econometric Model of Network Formation with an Application to Board Interlocks between Firms », Journal of Econometrics, vol. 224, n° 2, octobre 2021, p. 345–370.

Publié dans

Journal of Econometrics, vol. 224, n° 2, octobre 2021, p. 345–370