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Social network structure and status competition
Author(s) -
Alexeev Michael,
Chih YaoYu
Publication year - 2015
Publication title -
canadian journal of economics/revue canadienne d'économique
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.773
H-Index - 69
eISSN - 1540-5982
pISSN - 0008-4085
DOI - 10.1111/caje.12121
Subject(s) - centrality , economics , microeconomics , competition (biology) , index (typography) , consumption (sociology) , externality , measure (data warehouse) , social network (sociolinguistics) , econometrics , computer science , mathematics , statistics , ecology , biology , social science , database , sociology , world wide web , social media
In status competition studies, the utility of heterogeneous individuals typically depends on an economy‐wide average indicator of status. In our model, emulative and jealous agents are embedded in an exogenous network where agent‐specific reference group is determined by the direct link emanating from the agent. Similarly to Ghiglino and Goyal (2010) but in a somewhat different framework, we show that individual consumption is proportional to the agent's “outbound” Katz‐Bonacich network centrality measure and equilibrium is generally inefficient. More important, the negative externality associated with each agent depends on her “inbound” centrality measure—the conspicuousness index. A tax based on this index combined with a uniform lump‐sum transfer attains efficiency.