nep-net New Economics Papers
on Network Economics
Issue of 2006‒05‒13
six papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Incorporating Transportation Network Structure in Spatial Econometric Models of Commodity Flows By LeSage, James P.; Polasek, Wolfgang
  2. The Impact of Entry and Competition by Open Source Software on Innovation By Bitzer, Jürgen; Schröder, Philipp J.H.
  3. Network investment and the threat of regulation – preventing monopoly exploitation or infrastructure construction? By Ulrich Blum; Christian Growitsch; Niels Krap
  4. Social capital as social networks. A new framework for measurement. By Fabio Sabatini
  5. Eight degrees of separation By Paolo Pin
  6. Power and the Analysis of the Food System By Valeria Sodano

  1. By: LeSage, James P. (Department of Economics, University of Toledo); Polasek, Wolfgang (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria)
    Abstract: We introduce a regression-based gravity model for commodity flows between 35 regions in Austria. We incorporate information regarding the highway network into the spatial connectivity structure of the spatial autoregressive econometric model. We find that our approach produces improved model fit and higher likelihood values. The model accounts for spatial dependence in the origin-destination flows by introducing a spatial connectivity matrix that allows for three types of spatial dependence in the origins to destinations flows. We modify this origin-destination connectivity structure that was introduced by LeSage and Pace (2005) to include information regarding the presence or absence of a major highway/train corridor that passes through the regions. Empirical estimates indicate that the strongest spatial autoregressive effects arise when both origin and destination regions have neighboring regions located on the highway network. Our approach provides a formal spatial econometric methodology that can easily incorporate network connectivity information in spatial autoregressive models.
    Keywords: Commodity flows, Spatial autoregression, Bayesian, Maximum likelihood, Spatial connectivity of origin-destination flows
    JEL: R1 R41 L92 C21
    Date: 2006–05
  2. By: Bitzer, Jürgen (Free University, Berlin); Schröder, Philipp J.H. (Department of Organisation and Management, Aarhus School of Business)
    Abstract: No abstract
    Keywords: No keywords;
    Date: 2005–12–01
  3. By: Ulrich Blum; Christian Growitsch; Niels Krap
    Abstract: In summer 2005, the German telecommunication incumbent Deutsche Telekom announced its plans to build a new broadband fibre optics network. Deutsche Telekom decided as precondition for this new network not to be regulated with respect to pricing and third party access. To develop a regulator's strategy that allows investments and prevents monopolistic prices at the same time, we model an incumbent's decision problem under a threat of regulation in a game-theoretical context. The decision whether to invest or not depends on the probability of regulation and its assumed impact on investment returns. Depending on the incumbent's expectation on these parameters, he will decide if the investment is favourable, and which price to best set. This price is below a non-regulated profit maximising price, since the incumbent tries to circumvent regulation. Thus, we show that the mere threat of a regulator's intervention might prevent supernormal profits without actual price regulation. The regulator, on the other hand, can influence both investment decision and the incumbent's price via his signals on regulation probability and price. These signals an be considered optimal, if they simultaneously allow investment and minimize the incumbent's price.
    Keywords: regulation, investment, teleommuniation, network industries
    JEL: L43 L51 L96
    Date: 2006–05
  4. By: Fabio Sabatini
    Abstract: The contribution of this paper to the social capital literature is twofold. Drawing on the Italian data, it firstly develops a new framework for measurement, allowing to build indicators for five different components of the multidimensional concept of social capital. Secondly, it provides a single, synthetic, measure capturing that particular configuration of social capital which the literature generally associates with positive economic outcomes.
    Keywords: Social capital, Social networks, Economic development, Principal component analysis, Multiple factor analysis.
    JEL: A12 O10 O18 R11 Z13
    Date: 2005–07
  5. By: Paolo Pin (Department of Economics, University Of Venice Cà Foscari)
    Abstract: The paper presents a model of network formation where every connected couple give a contribution to the aggregate payoff, eventually discounted by their distance, and the resources are split between agents through the Myerson value. As equilibrium concept we adopt a refinement of pairwise stability. The only parameters are the number N of agents and a constant cost k for every agent to maintain any single link. This setup shows a wide multiplicity of equilibria, all of them connected, as k ranges over non trivial cases. We are able to show that, for any N, when the equilibrium is a tree (acyclical connected graph), which happens for high k, and there is no decay, the diameter of such a network never exceeds 8 (i.e. there are no two nodes with distance greater than 8). Adopting no decay and studying only trees, we facilitate the analysis but impose worst-case scenarios: we conjecture that the limit of 8 should apply for any possible non--empty equilibrium with any decay function.
    Keywords: Network Formation, Myerson value
    JEL: D85
    Date: 2006
  6. By: Valeria Sodano
    Abstract: This paper stresses that in order to understand the current restructuring processes in the food system it is necessary to take explicitly into account the role of power as a driving organizational force. Agricultural economics, drawing pervasively on the walrasian model, has mainly analysed power in the form of market and bargaining power. Stemming from different definitions of power, the paper focuses on some definitions suggested by the new institutional economics and the network theory, showing their relevance to the analysis of the food market
    Keywords: power, scale-free networks, new institutional economics
    JEL: B52 L66 Z13
    Date: 2006–04

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