We examine a simple economic model of network formation where agents benefit from indirect relationships. We show that small-world features-short path lengths between nodes together with highly clustered link structures-necessarily emerge for a wide set of parameters. (JEL: D85, A14, C72)...

Global commons problems, such as climate change, are often affected by severe uncertainty. The paper examines the effect of uncertainty on pollution emissions and welfare in a strategic context. We find that emissions are always lower under uncertainty than under certainty, reflecting...