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We are most grateful to our adviser George Mailath for his invaluable advice and encouragement. For this case, we characterize conditions for a sequential equilibrium in which both high and low quality are supplied.

when networking is costly and M is large, low quality is supplied with positive probability in any Nash equilib-rium.

We also show that high quality can be sold in a sequential equilibrium with population M even when each buyer periodically interacts with only N ¤ (M) players where 0 < lim M !1 N ¤2 =M < 1: We show that. We study community enforcement in a private information, random match-ing setting, where buyers privately etwork' for information and sellers have a short term incentive to supply low quality.

The tor project founder