We study how altruism networks affect the adoption of formal insurance. Agents have private CARA utilities and are embedded in a network of altruistic relationships. Incomes are subject to both a common shock and a large idiosyncratic shock. Agents can adopt formal insurance to cover the common...

Firms raise cost-reducing alliances before competing with each other, but cannot fully internalize the shared knowledge. When spillovers are local and transit through the network of alliances, stable architectures with a moderate level of asymmetry are identified