This paper provides a game-theoretic model of network formation with a continuous effort choice. Efforts are strategic complements for direct neighbors in the network and display global substitution/congestion effects. We show that if the parameter governing local strategic complements is larger...

This paper presents a model of endogenous network formation in the presence of peer effects for a general class of payoff functions with local complementarities in effort levels and positive local externalities. Links are one-sided and agents move simultaneously. I find that equilibrium networks...

This paper studies a central bank's optimal interest rate corridor choice in the presence of an endogenous interbank network. We first provide a characterization of the unique equilibrium of banks' liquidity holdings for any network of credit lines. Then, we endogenize the network and show that...