nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2017‒11‒05
five papers chosen by
Walter Frisch
Universität Wien

  1. Competition and Product Misrepresentation By Daniel Goetz
  2. To Enhance E-Commerce Enabling Connectivity in Asia By Fukunari Kimura; Lurong Chen
  3. Online Social Networks: Approval by Design By Matthew Ellman
  4. Cities and the Structure of Social Interactions: Evidence from Mobile Phone Data By Konstantin Büchel; Maximilian von Ehrlich
  5. Dynamic Interbank Network Analysis Using Latent Space Models By Fernando Linardi; Cees (C.G.H.) Diks; Marco (M.J.) van der Leij; Iuri Lazier

  1. By: Daniel Goetz (Rotman School of Management, 105 St. George St., Toronto, ON, Canada M5S 3E6)
    Abstract: This paper examines the effect of competition on product quality when product quality is unobserved before purchase. Using a dataset that records the actual broadband internet speed consumers receive as well as the speed the provider claims is being delivered, I find that an additional broadband competitor raises the ratio of actual to claimed speeds for incumbents by between 23 and 32 percent within the first 6 months, but that this effect attenuates after 18 months. This increase is due to improvements in the actual speed, and not just reductions in the claimed speed. I recover the causal effect of competition on product misrepresentation by leveraging the launch of a broadband-capable satellite in mid-2012 and exploiting exogenous variation in the suitability for satellite internet across U.S. counties. I provide suggestive evidence that the reduction in firms’ strategic misrepresentation of their products led to reduced misallocation of consumers across internet plans.
    Keywords: broadband access; market structure; quality disclosure
    JEL: L96 L11 L15
    Date: 2017–09
  2. By: Fukunari Kimura (Economic Research Institute for ASEAN and East Asia (ERIA)); Lurong Chen (Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: Cross-border e-commerce has been a major development trend of international trade and globalization. In the next 5-10 years, the top three fastest growing markets in the world-India, Indonesia, and Malaysia-will all come from Asia. Connectivity is the cornerstone of e-commerce development. E-commerce supporting connectivity aims to ease free information flow, logistics, free cash flow, and seamless links between the virtual and physical parts of e-commerce network. Accordingly, policy efforts include: (a) increasing the supply of public goods to improve connectivity infrastructure in both physical world and cyberspace, (b) establishing rules and regulations to ensure dynamics and competition of online market place, (c) improving connectivity-drived services to generate more value added, (d) prioritizing smartphone economy and Internet financial innovation, and, (e) collaboration in the region-wide e-commerce enabling environment
    Date: 2017–01
  3. By: Matthew Ellman (Institute of Economic Analysis, IAE-CSIC, and Barcelona GSE)
    Abstract: Online social networks (OSN) influence the transmission of information in society. This paper analyzes how a profit-motivated OSN designs the instant feedback options, such as “likes†or up-votes and down-votes or disapprovals, that it aggregates into user ratings, and how these design choices affect social and economic outcomes. The OSN seeks to maximize advertising revenues via maximal engagement. We compare OSN designs that allow users to only up-vote other users' content contributions or “posts†against OSN designs that allow both up and down votes. Users care about what others think of them. The feedback system mediates what users with imperfect private signals learn about each others' contributions and about each other. The OSN design affects both the expected social approval gains from engaging as a contributor and the value to users from engaging as viewers of others' content. Up and down votes improve viewers information but removing the down-vote option can raise user willingness to contribute content by reducing the threat of unambiguous disapproval. We investigate a full set of OSN designs in a range of social contexts.
    Keywords: Online social networks, feedback design, user-generated content, quality, rating systems, platform economics, media economics.
    JEL: L13 L82
    Date: 2017–10
  4. By: Konstantin Büchel; Maximilian von Ehrlich
    Abstract: Social interactions are considered pivotal to agglomeration economies. We explore a unique dataset on mobile phone calls to examine how distance and population density shape the structure of social interactions. Exploiting an exogenous change in travel times, we show that distance is highly detrimental to interpersonal exchange. Despite distance-related costs, we find no evidence that urban residents benefit from larger networks when spatial sorting is accounted for. Higher density rather generates a more efficient network in terms of matching and clustering. These differences in network structure capitalize into land prices, corroborating the hypothesis that agglomeration economies operate via network efficiency.
    Keywords: social interactions, agglomeration externalities, network analysis, spatial sorting
    JEL: R10 R23 D83 D85 Z13
    Date: 2017
  5. By: Fernando Linardi (University of Amsterdam, The Netherlands; Central Bank of Brazil, Brazil); Cees (C.G.H.) Diks (University of Amsterdam, The Netherlands; Tinbergen Institute, The Netherlands); Marco (M.J.) van der Leij (University of Amsterdam, The Netherlands; De Nederlandsche Bank, The Netherlands); Iuri Lazier (Central Bank of Brazil, Brazil)
    Abstract: Longitudinal network data are increasingly available, allowing researchers to model how networks evolve over time and to make inference on their dependence structure. In this paper, a dynamic latent space approach is used to model directed networks of monthly interbank exposures. In this model, each node has an unobserved temporal trajectory in a low-dimensional Euclidean space. Model parameters and latent banks' positions are estimated within a Bayesian framework. We apply this methodology to analyze two different datasets: the unsecured and the secured (repo) interbank lending networks. We show that the model that incorporates a latent space performs much better than the model in which the probability of a tie depends only on observed characteristics; the latent space model is able to capture some features of the dyadic data such as transitivity that the model without a latent space is not able to.
    Keywords: network dynamics; latent position model; interbank network; Bayesian inference
    JEL: C11 D85 G21
    Date: 2017–10–26

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