nep-net New Economics Papers
on Network Economics
Issue of 2005‒01‒02
five papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Local Network Effects and Network Structure By Arun Sundararajan
  2. Platform Ownership By Volker Nocke; Martin Peitz; Konrad Stahl
  3. Congestion and tax competition in a parallel network By De Borger B.; Proost S.; Van Dender K.
  4. Vertical and horizontal tax competition in the transport sector By De Borger B.; Proost S.
  5. The Network Economy and Models of the Employment Contract: Psychological, Economic and Legal By David Marsden

  1. By: Arun Sundararajan
    Abstract: This paper presents a model of local network effects in which agents connected in a social network each value adoption by a heterogeneous subset of others, and have incomplete information about the structure and strength of adoption complementarities between all other agents. I show that the symmetric Bayes-Nash equilibria of a general adoption game are in monotone strategies, can be strictly Pareto-ranked, and that the greatest equilibrium is uniquely coalition-proof. Each Bayes-Nash equilibrium has a corresponding fulfilled-expectations equilibrium under which agents form local-adoption expectations. Examples analyze three special cases including a standard model with completely connected agents, and characterize the distributions of equilibrium networks of adopters when the social network is an instance of a generalized random graph.
    Keywords: network structure, random graph, small world, science of networks, network formation, adoption game,
    JEL: C72
    Date: 2004–12–19
  2. By: Volker Nocke (Department of Economics, University of Pennsylvania); Martin Peitz (Department of Economics, University of Mannheim); Konrad Stahl (Department of Economics, University of Mannheim)
    Abstract: We develop a general theoretical framework of trade on a platform on which buyers and sellers interact. The platform may be owned by a single large, or many small independent or vertically integrated intermediaries. We provide a positive and normative analysis of the impact of platform ownership structure on platform size. The strength of network effects is important in the ranking of ownership structures by induced platform size and welfare. While vertical integration may be welfare-enhancing if network effects are weak, monopoly platform ownership is socially preferred if they are strong. These are also the ownership structures likely to emerge.
    Keywords: Two-Sided Markets, Network Effects, Intermediation, Product Diversity
    JEL: L10 D40
    Date: 2004–07–21
  3. By: De Borger B.; Proost S.; Van Dender K.
    Abstract: The purpose of this paper is to study tax competition on a parallel road network when different governments have tolling authority on different links of the network. Reflecting many current situations in Europe, each link is used by both local and transit traffic, and transit has a choice of route. Each government maximises the surplus of local users plus total tax revenues in controlling local and transit transport. Three types of tolling systems are considered: (i) toll discrimination between local traffic and transit, (ii) uniform tolls on local and transit transport, (iii) local tolls only. The results suggest that the welfare effects of introducing transit tolls are large, but that differentiation of tolls between local and transit transport as compared to uniform tolls does not yield large welfare differences. Moreover, the welfare effects of coordination between countries are relatively small in comparison with the welfare gains of tolling transit. Numerical application of the model further illustrates the effects of different transit shares and explicity considers the role of asymmetries between countries. Higher transit shares strongly raise the Nash equilibrium transit toll and slightly decrease local tolls. With asymmetric demands, the welfare gains of introducing differentiated tolling rise strongly for the country with lower local demand.
    Date: 2004–03
  4. By: De Borger B.; Proost S.
    Abstract: The purpose of this paper is to review the literature dealing with horizontal and vertical tax competition in the transport sector, taking into account the role of transport externalities. Our emphasis throughout is on tax competition between welfare maximizing governments. For the various different settings (horizontal and vertical competition, parallel and serial networks), we discuss the relevance of tax competition and describe the type of results obtained in the scarce literature on the topic. We further point out the relevance of different types of tax competition for transport policy in a European setting. Finally, we discuss the losses of non-cooperative behaviour of governments.
    Date: 2004–10
  5. By: David Marsden
    Abstract: The emergence of the so-called ¿network economy¿ and the development of project-basedwork pose a fundamental challenge to established methods of regulating the employmentrelationship. There appears to be an unsatisfied demand for its greater use, especially amongemployers, and it is argued that this may be blocked by the lack of suitable contractual forms,such as those that have underpinned the established open-ended employment relationship.Project-based work seeks to retain some of the open-ended flexibility of the standardemployment relationship in relation to its task content but not its duration. The paper arguesthe success of the standard employment relationship owes much to the articulation of itspsychological, economic/incentive, and legal aspects. As yet, this appears to be lacking formore transient forms of relationship.
    Keywords: Network economy, Labor Contracting, Labor Law, Labor-Management Relations
    JEL: M55 K31 J44 J53
    Date: 2004–02

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