Communication network formation with link specificity and value transferability

► A model on strategic formation of communication networks is proposed. ► The negative externality of link specificity (LS) is introduced. ► The positive externality of value transferability (VT) is confined to part of value. ► Without VT, many nonstandard networks can be pairwise stable. ► VT offers efficiency via fragmentation with high LS and densification with low LS.