Abstract
In this paper we propose a theoretical framework that incorporates both social and transportation networks into an equilibrium model of social interactions in order to examine how the level and the spatial pattern of communication between agents depend on both networks. By analyzing the model, we obtain the Nash equilibrium communication demand which is achieved as a result of the utility-maximizing behavior of the agents and analyze the relationship between topology of social networks and the equilibrium level of social interactions by a simple numerical example. Furthermore, we declare that the market equilibrium is not efficient because of the positive externality of social interactions and examine the value of the subsidy that could support the first-best allocation as an equilibrium.
