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on Network Economics |
| By: | Xavier Fageda |
| Abstract: | In this paper, we analyze how an airline can take advantage of airport dominance of a whole network in a market characterized by short-haul routes and congestion. In order to tackle this issue, we estimate an equation system, which is based on theoretical grounds, for the Spanish domestic market. We find that costs and demand benefits of airport dominance have to do with providing a high flight frequency. Such benefits can damage seriously the effectiveness of competition as long as the competitive status of major airline’s rivals is threatened. |
| Keywords: | Air Transportation, Multiple Equation Models, Oligopoly. |
| JEL: | L |
| Date: | 2005–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpio:0511010&r=net |
| By: | Alessio D’Ignazio; Emanuele Giovannetti |
| Abstract: | In this paper we study concentration in the European Internet upstream access market. Measurement of market concentration depends on correctly defining the market, but this is not always possible as Antitrust authorities often lack reliable pricing and traffic data. We present an alternative approach based on the inference of the Internet Operators interconnection policies using micro-data sourced from their Border Gateway Protocol tables. Firstly we propose a price-independent algorithm for defining both the vertical and geographical relevant market boundaries, then we calculate market concentration indexes using two novel metrics. These assess, for each undertaking, both its role in terms of essential network facility and of wholesale market dominance. The results, applied to four leading Internet Exchange Points in London, Amsterdam, Frankfurt and Milan, show that some vertical segments of these markets are extremely competitive, while others are highly concentrated, putting them within the special attention category of the Merger Guidelines. |
| Keywords: | Network Industries, Internet, Market Concentration, Essential Facilities, BGP |
| JEL: | K21 L40 L86 L96 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0554&r=net |
| By: | Rainer Andergassen (Economics Università di Bologna); Franco Nardini |
| Abstract: | This paper attempts to generalise some results obtained in previous work showing the conditions under which paradigm setters emerge. We distinguish two different but definitely complementary and overlapping ways through which searching and learning occur. The first exploits the spillover potential that lies in a firm's network and thanks to which gathering innovation-useful information is actually possible. The second rests with the autonomous capacity that a firm possesses in order to carry out in-house innovative search. While these two searching processes not only coexist but are also reciprocally sustaining, we find it expedient to separate them by integrating a knowledge diffusion mechanism that propagates technological capabilities with an independent stochastic process capturing innovation arrivals due to internal R.&D. A network's evolution depends on how firms assess their performance in terms of innovation-enabling spillovers. In a bounded rationality framework, firms normally explore a limited part of the firms' space and require a protocol to target their information gathering efforts. The paper addresses this issue by designing a routinised behaviour according to which firms periodically reshape the neighbourhood that they observe to glean information by reassessing other firms' contributions to their own capability. The way the specific neighbour-choosing routine is accordingly organised determines in a significant way firms' average innovative capability. This feature is modelled by changing the span of network observation from a very broad setting, the whole economy, to a very narrow one, namely the most proximate neighbourhood membership. The economy is further portrayed as a collection of cognitively heterogeneous agents possessing firm specific knowledge and, thus, firm specific innovative capability. We also find it expedient to classify this assumed population according to their capability to capture broadcast information. This procedure implies viewing the economy as an ensemble of areas of cognitive exchange within which knowledge spillovers flow with equal ease. This approach to modelling interaction bears an important implication: the choice of new neighbours poses the problem of a trade-off between easily obtainable information, yet carrying low innovation empowering content, and hard to acquire, because cognitively distant, information but possibly conveying high capability contributions. To keep the model mathematically tractable, we formalise the features stated above by means of a linear system in which technological capabilities are made to depend on a matrix of interaction with evolving neighbours as well as on a vector of in-house generated knowledge. The model is then simulated to determine the emergent properties of neighbourhood formation and stability together with average capability |
| Keywords: | Paradigm setters, Netwoks, Technical Change, Bounded Rationality |
| JEL: | L14 O33 |
| Date: | 2005–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:sce:scecf5:322&r=net |
| By: | Allen wilhite |
| Abstract: | We tend to interact with same people, day after day. Might this affect our behavior? In an abstract fashion, we look at this question. To model this repeated interaction with a small subset of the entire population we place agents on the nodes of a network and have them play a prisoners’ dilemma game exclusively with their neighbors. We then alter the payoffs of the game and the topology of the network to see if, when, and to what degree cooperation survives. We find widely divergent aggregate decisions across networks and across payoffs. But, there is commonality as well. It seems clear that some networks, or some organizational structures, are more conducive to fostering cooperation |
| Keywords: | PD games, networks |
| JEL: | C73 |
| Date: | 2005–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:sce:scecf5:20&r=net |
| By: | Mary Burke; Gary Fournier |
| Abstract: | We develop an explanation of the emergence of local norms, and the associated phenom- enon of geographical variation in behavior. Individuals are assumed to interact locally with neighbors in an environment with a network externality. Although many patterns of behavior are possible, the dispersed interactive choices of agents are shown to select behavior that is locally uniform but globally diverse. The range of applications of the theory includes regional variation in the practice of medicine, technology choice, and corruption. The framework is also useful for further developing our understanding of important phenomena like lock-in, critical thresholds, and contagion |
| Keywords: | Social norms, networks, geographical variation |
| JEL: | C73 |
| Date: | 2005–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:sce:scecf5:299&r=net |
| By: | Mair, Johanna (IESE Business School); Schoen, Oliver (IESE Business School) |
| Abstract: | Although social entrepreneurial organizations have begun to receive more scholarly attention, we still know relatively little about how they are able to create both social and economic value. This paper presents a comparative case analysis of three social entrepreneurial organizations, based in Bangladesh, Egypt and Spain, whose success has been widely recognized. Analysis of these organizations' business models reveals common patterns: in their use of strategic resources, in their value networks, and in their customer interface. The findings suggest that successful social entrepreneurial organizations pro-actively create their own value network of companies that share their social vision; develop resource strategies as an integral part of the business model; and integrate the target group into the social value network. Propositions are advanced regarding the business models of successful social entrepreneurial organizations. |
| Keywords: | social entrepreneurship; business model; developing countries; |
| Date: | 2005–10–07 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0610&r=net |
| By: | Oleg V. Pavlov (Social Science and Policy Studies WPI) |
| Abstract: | Peer-to-peer technology has made massive music piracy possible, which, in turn, has arguably had a significant economic impact on the recording industry. Record labels have responded to online piracy with litigation and are also considering self-help measures. It is currently not obvious whether or not these counter-piracy strategies will ultimately stifle online file sharing in the long term. With this paper we attempt to add to our understanding of the conflict within the institution that is the commercial music industry. We conduct an institutional analysis of the industry in transition and extend the traditional pattern modeling methodology with a formal resource-based model of a representative online music network. The model accounts for complex causal interactions between resources, private provision of common goods, free riding and membership dynamics. The numerical implementation of the model is the basis of a decision support system, which is used in a series of computer experiments that emulate anti-piracy scenarios. We show that a peer-to-peer system may be quite resilient to outside disturbances. The experiments also demonstrate that policies rank differently in their effectiveness based on a selected yardstick. |
| Keywords: | Peer-to-peer (P2P) networks; Online File Sharing; Copyright; Simulation |
| JEL: | K40 H40 C60 |
| Date: | 2005–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:sce:scecf5:233&r=net |
| By: | Maria Jesus Nieto; Lluis Santamaría |
| Abstract: | In the current competitive scenario, firms are driven to introduce products with a higher degree of novelty. Consequently, there is a growing need to understand the critical success factors behind radical innovation. Specifically, this work empirically and theoretically analyses the role of different types of collaborative networks in achieving product innovation and, more precisely, the degree of novelty. Using a longitudinal data of Spanish manufacturing firms, our results show that the continuity on the co-operative strategy, the type of partner and the diversity of collaborative networks are critical factors in achieving a higher degree of novelty in product innovation. |
| URL: | http://d.repec.org/n?u=RePEc:cte:wbrepe:wb056516&r=net |
| By: | Suzanne Konzelmann; Charles Craypo; Rabih Aridi; Frank Wilkinson |
| Abstract: | Using the cases of Wal-Mart and IKEA, this paper takes a productive systems approach to examine Ôvarieties of capitalismÕ from the perspective of the ways by which production and market relations are structured and prioritised. It considers the nature of these relations and their interaction within the domestic economy and the ways that firms and national systems interact with each other in the global economy. It examines the processes by which trading standards are transported via supply chain relationships, which ultimately become embedded in products and recognized by consumers at various stages. In this analysis, the cases of Wal-Mart and IKEA provide insight into the ways by which national systems extend themselves globally, their contrasting effects on the business environments in host localities, and the impact of the resulting supply chain relations on organizational performance. |
| Keywords: | varieties of capitalism, supply chain relations, employment relations, globalisation, retail sector, IKEA and Wal-Mart |
| JEL: | J80 L10 L20 L81 M14 M50 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp314&r=net |