Dynamics of Networks If Everyone Strives for Structural Holes
When entrepreneurs enter "structural holes" in information networks, they can make a profit by exploiting the access and control benefits that these provide. That is Ronald Burt's 14-year-old argument. Ever since, evidence for the suggested advantages has steadily accumulated. What has remained unanswered, however, is the question whether those who strive for such structural advantages can actually obtain and maintain them. Burt's informal treatment and economic models of information network evolution suggest as equilibrium network the star, in which a single broker acquires all of the access and control benefits. Introducing a methodology for answering a question like this, we characterize the networks that are obtained after beneficial links have been added and costly ones removed. The predominant equilibrium turns out to be the "balanced complete bipartite network." Paradoxically, this network,- in stark contrast to the star - distributes benefits evenly, so no one has a structural advantage.