nep-net New Economics Papers
on Network Economics
Issue of 2006‒09‒03
four papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Quantifying Equilibrium Network Externalities in the ACH Banking Industry By Daniel A. Ackerberg; Gautam Gowrisankaran
  2. Screening Efficiency of Networks By D. Lanzi
  3. Firms' Network Formation Through the Transmission of Heterogeneous Knowledge By R. Andergassen; F. Nardini; M. Ricottilli
  4. Social Networks and the Convergence of Population Attributes: A Generalization By Jan K. Brueckner; Oleg Smirnov

  1. By: Daniel A. Ackerberg; Gautam Gowrisankaran
    Abstract: We seek to determine the causes and magnitudes of network externalities for the automated clearinghouse (ACH) electronic payments system. We construct an equilibrium model of customer and bank adoption of ACH. We structurally estimate the parameters of the model using an indirect inference procedure and panel data. The parameters are identified from exogenous variation in the adoption decisions of banks based outside the network and other factors. We find that most of the impediment to ACH adoption is from large customer fixed costs of adoption. Policies to provide moderate subsidies to customers and larger subsidies to banks for ACH adoption could increase welfare significantly.
    JEL: L0 L13 L86 L88
    Date: 2006–08
  2. By: D. Lanzi
    Date: 2006
  3. By: R. Andergassen; F. Nardini; M. Ricottilli
    Date: 2005
  4. By: Jan K. Brueckner (Department of Economics, University of California-Irvine); Oleg Smirnov (Departments of Economics and Geography, San Diego State University)
    Abstract: Analysis of social interactions has recently become an important area of economic research, and the focus of researchers in this area has increasingly shifted toward dynamic models. In one recent contribution, Brueckner and Smirnov (2006) analyze the evolution of population attributes in an exceedingly simple model where an agent’s attributes at time t are equal to the average attribute value among his acquaintances. The pattern of acquaintances in the population is determined by the social network, and Brueckner and Smirnov (BS) explore the effect of network characteristics on the convergence of population attributes over time. They show that some simple sufficient conditions on the network structure ensure convergence to a “melting-pot” equilibrium, where attributes are uniform across agents. The present paper provides a generalization of BS’s analysis, allowing for a more general form of the rule governing the evolution of population attributes. The analysis shows that BS’s previous conclusions continue to hold under this generalization, while also providing a result that can be applied more generally to other models.
    Date: 2006–05

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