Networks, Markets, and Inequality | Zendy

Julien Gag | Zendy; Sanjeev Goyal | Zendy

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Networks, Markets, and Inequality

Author(s) -

Julien Gag,

Sanjeev Goyal

Publication year - 2016

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.20150635

Subject(s) - inequality , economics , core (optical fiber) , welfare , social network (sociolinguistics) , empirical evidence , economic inequality , social inequality , social welfare , public economics , microeconomics , labour economics , market economy , political science , mathematical analysis , philosophy , materials science , mathematics , epistemology , law , composite material , social media

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.

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