nep-net New Economics Papers
on Network Economics
Issue of 2005‒12‒01
ten papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Regulatory reforms in selected EU network industries By Reiner Martin; Moreno Roma; Isabel Vansteenkiste
  2. ATM surcharge bans and bank market structure: the case of Iowa and its neighbors By Timothy H. Hannan
  3. Accounting standards and information: inferences from cross-listed financial firms By John Ammer; Nathanael Clinton; Gregory P. Nini
  4. The economics of social networks By Jackson, Matthew O.
  5. Informal Insurance in Social Networks By Francis Bloch; Garance Genicot
  6. Segregation in Networks By Giorgio Fagiolo; Marco Valente; Nicolaas J. Vriend
  7. Ethnic networks and U.S. exports By Subhayu Bandyopadhyay; Cletus C. Coughlin; Howard J. Wall
  8. Like father, like son: Social networks, human capital investment, and social mobility By Calvo-Armengol, Antoni; Jackson, Matthew O.
  10. The Growth of Network Computing: Quality Adjusted Price Changes for Network Servers By John Van Reenen

  1. By: Reiner Martin (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Moreno Roma (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Isabel Vansteenkiste (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.)
    Abstract: In the course of the 1990s, the EU has embarked on an ambitious regulatory reform programme for a number of European network industries, such as telecommunications, energy and transport. This paper analyses the potential benefits of successful reforms in these sectors with a focus on the price effects of regulatory reforms. Following a review of the existing empirical literature in this field, the paper discusses the evolution of the current regulatory framework for network industries in the EU. An empirical analysis of the main determinants of recent price developments in these industries provides evidence that regulatory reform measures had a substantial downward impact on prices in the four sectors under review.
    Keywords: Network Industries, Panel Data, Price effects, Regulatory Reforms.
    JEL: E30 L33 L51 L93 L94 L95 L96
    Date: 2005–04
  2. By: Timothy H. Hannan
    Abstract: It is frequently claimed that high ATM surcharges actually attract customers to the banks that impose them, particularly if they operate large ATM networks. By exploiting as "natural experiments" two events associated with the lifting of surcharge bans in Iowa and in the states that neighbor Iowa, this paper seeks to test for the implications of this phenomenon as it applies to the market shares of banking institutions and to several aspects of market structure. Consistent with these implications, results of "difference-in-difference" analyses suggest that the shares of larger market participants increase, the shares of smaller market participants decrease, market concentration increases, and the number of market competitors decreases after the lifting of surcharge bans.
    Keywords: Automated tellers - Middle West ; Banks and banking - Middle West
    Date: 2005
  3. By: John Ammer; Nathanael Clinton; Gregory P. Nini
    Abstract: Publicly traded financial firms within the European Union will be required to adhere to International Accounting Standards (IAS) in their financial reporting beginning in 2005, which can entail a higher degree of financial disclosure than was previously mandated under national accounting standards. A number of European financial firms had previously subjected themselves to additional disclosure by listing their stock on U.S. exchanges, which obligates them to reconcile their financial accounts to U.S. GAAP (Generally Accepted Accounting Principles). Among national accounting systems, U.S. GAAP is considered to be both among the strictest and the most similar to International Financial Reporting Standards (IFRS). To test whether U.S. GAAP reconciliation effectively enhances disclosure, we examine several measures of transparency for the cross-listed firms, relative both to pre-listing measures and to a control sample of firms that have not cross-listed. Our measures include bid-ask spreads, earnings forecast errors, analyst coverage, dispersion in earnings expectations, and disagreement between Moody’s and S&P’s bond ratings. We find evidence that cross-listing increases transparency in at least some cases. Our cross-sectional results also distinguish a handful of European financial firms that had already adopted IFRS before the European Commission announced that IAS would be required in the near future, with results similar to those of the cross-listed firms. Accordingly, to the extent that commitment to increased transparency has been a motivation for cross-listing, the adoption of IAS in Europe may reduce the incentives for European firms to cross-list in the United States.
    Keywords: Accounting - Standards ; International finance
    Date: 2005
  4. By: Jackson, Matthew O.
    Abstract: The science of social networks is a central field of sociological study, a major application of random graph theory, and an emerging area of study by economists, statistical physicists and computer scientists. While these literatures are (slowly) becoming aware of each other, and on occasion drawing from one another, they are still largely distinct in their methods, interests, and goals. Here, my aim is to provide some perspective on the research from these literatures, with a focus on the formal modeling of social networks and the two major types of models: those based on random graphs and those based on game theoretic reasoning. I highlight some of the strengths, weaknesses, and potential synergies between these two network modeling approaches.
    Keywords: networks, social networks, network games, network formation, game theory
    Date: 2005–08
  5. By: Francis Bloch; Garance Genicot
    Keywords: social networks, informal insurance.
    JEL: D85 D80
    Date: 2005
  6. By: Giorgio Fagiolo; Marco Valente; Nicolaas J. Vriend
    Abstract: Schelling (1969, 1971, 1971, 1978) considered a simple model with individual agents who only care about the types of people living in their own local neighborhood. The spatial structure was represented by a one- or two-dimensional lattice. Schelling showed that an integrated society will generally unravel into a rather segregated one even though no individual agent strictly prefers this. We make a first step to generalize the spatial proximity model to a proximity model of segregation. That is, we examine models with individual agents who interact 'locally' in a range of network structures with topological properties that are different from those of regular lattices. Assuming mild preferences about with whom they interact, we study best-response dynamics in random and regular non-directed graphs as well as in small-world and scale-free networks. Our main result is that the system attains levels of segregation that are in line with those reached in the lattice-based spatial proximity model. In other words, mild proximity preferences can explain segregation not just in regular spatial networks but also in more general social networks. Furthermore, segregation levels do not dramatically vary across different network structures. That is, Schelling's original results seem to be robust also to the structural properties of the network.
    Keywords: Spatial proximity model, Social segregation, Schelling, Proximity preferences, Social networks, Undirected graphs, Best-response dynamics.
    Date: 2005–11–22
  7. By: Subhayu Bandyopadhyay; Cletus C. Coughlin; Howard J. Wall
    Abstract: This paper provides new estimates of the effects of ethnic network on U.S. exports. In line with recent research, our dataset is a panel of exports from U.S. states to 29 foreign countries. Our analysis departs from the literature in two ways, both of which have noteworthy empirical consequences. Our main departure is to remove the restriction that the network effect is the same for all ethnicities. In addition, because our dataset contains a time dimension, we are able to control for unobserved heterogeneity with properly specified fixed effects. We find that ethnic-network effects are much larger than has been estimated previously, although they are important only for a subset of countries.
    Keywords: Exports ; Regional economics
    Date: 2005
  8. By: Calvo-Armengol, Antoni; Jackson, Matthew O.
    Abstract: We build a model where an individual sees higher returns to investments in human capital when their neighbors in a social network have higher levels of human capital. We show that the correlation of human capital across generations of a given family is directly related to the sensitivity of individual investment decisions to the state of the social network. Increasing the sensitivity leads to increased intergenerational correlation, as well as more costly investment decisions on average in the society. We calibrate a simple threshold version of the model to data from a variety of EU nations. We also show how directly analyzing sensitivity of decisions to social circumstances can lead to information that is not captured by intergenerational correlation.
    Date: 2005–11
  9. By: Arthur Barrionuevo Filho; Cláudio R. Lucinda
    Abstract: In this paper, we aim to investigate the optimum values for the termination rate on mobile networks in Brazil. In order to do so, initially we provide an overview of the legal framework on the subject since the privatization in the beginning of the 90's, as well as a market overview of the telecommunications sector in Brazil. In the second section, we provide a theoretical background on the subject and on the approaches used for the computing these prices, from the Ramsey pricing with network externalities, as used by Ofcom in the setting of termination charges for the United Kingdom, to the ones which use a framework of imperfect competition in the mobile sector, as presented in Wright (2000). The third section carries out a simulation of these approaches for parameter values of the Brazilian case. The fourth section concludes and posits some policy conclusions
    JEL: L14 L51 L52
    Date: 2005
  10. By: John Van Reenen
    Abstract: In this paper we investigate the evolution of quality adjusted prices for servers motivated by two facts.First, the productivity acceleration in the US economy since the mid 1990s is closely linked to spreadof information technology of which networked computing is a large component. Second, the growthof network computing itself has been fostered by the rapid growth in the quality and quantity of thenetwork server market. Like Pakes' (2003) analysis of the PC market, we show that our preferredversion of the hedonic price index ("complete hybrid") fell much more rapidly than the standard"matched model" price index (the hedonic index fell on average by about 30% per annum comparedto 17% p.a. for the matched model). This difference is mainly due to the selection bias in the standardmatched model price index due to the exit of obsolete models which would have had the fastest pricefalls.
    Keywords: hedonic prices, network servers, computers
    JEL: O3 L1 L4
    Date: 2005–07

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