nep-net New Economics Papers
on Network Economics
Issue of 2006‒11‒04
five papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Networks for Free Trade Agreements among Heterogeneous Countries By Ana, MAULEON; Huasheng, SONG; Vincent, VANNETELBOSCH
  2. Farsightedly Stable Networks By Herings P. Jean-Jacques; Mauleon Ana; Vannetelbosch Vincent
  3. An overview of Stackelberg pricing in networks By Hoesel Stan van
  4. Identification of Peer Effects Using Group Size Variation By D'Haultfoeuille, Xavier; Davezies, Laurent; Fougère, Denis

  1. By: Ana, MAULEON (UNIVERSITE CATHOLIQUE DE LOUVAIN, Center for Operations Research and Econometrics (CORE)); Huasheng, SONG (Zhejiang University); Vincent, VANNETELBOSCH
    Abstract: The paper examnes the formation of free trade agreements as a network formation game. We consider a three-country model in which international trade occurs between economies with imperfectly competitive product markets. Labor markets can be unionized and non-unionized in each country. We show that if all countries are of the same type (all of them are either unionized or non-unionized), the global free trade network is both the unique pairwise stable network and the unique efficient network. If some countries are unionized while others are non-unionized, other networks apart from the global free trade network are likely to be pariwise stable. however the efficient network is always the global free trade network. Thus, a conflict between stability and efficiency may occur. Moreover, starting from the network in which no country has signed a free trade agreement, all sequences of networks due to continuously profitable deviations to do not lead (in most cases) to the global free trade network, even when global free trade is stable
    Keywords: Free-trade agreements, Network formation games, Unionization
    JEL: F15 F16 C70
    Date: 2006–06–15
  2. By: Herings P. Jean-Jacques; Mauleon Ana; Vannetelbosch Vincent (METEOR)
    Abstract: We propose a new concept, the pairwise farsightedly stable set, in order to predict which networks may be formed among farsighted players. A set of networks G is pairwise farsightedly stable (i) if all possible pairwise deviations from any network g ∈ G to a network outside G are deterred by the threat of ending worse off or equally well off, (ii) if there exists a farsightedly improving path from any network outside the set leading to some network in the set, and (iii) if there is no proper subset of G satisfying (i) and (ii). We show that a non-empty pairwise farsightedly stable set always exists and we provide a full characterization of unique pairwise farsightedly stable sets of networks. Contrary to other pairwise concepts, pairwise farsighted stability yields a Pareto dominating network, if it exists, as the unique outcome. Finally, we study the relationship between pairwise farsighted stability and other concepts such as the largest consistent set.
    Keywords: Economics ;
    Date: 2006
  3. By: Hoesel Stan van (METEOR)
    Abstract: The Stackelberg pricing problem has two levels of decision making: tariff setting by an operator, and then selection of the cheapest alternative by customers. In the network version, an operator determines tariffs on a subset of the arcs that he owns. Customers, who wish to connect two vertices with a path of a certain capacity, select the cheapest path. The revenue for the operator is determined by the tariff and the amount of usage of his arcs. The most natural model for the problem is a (bilinear) bilevel program, where the upper level problem is the pricing problem of the operator, and the lower level problem is a shortest path problem for each of the customers. This paper contains a compilation of theoretical and algorithmic results on the network Stackelberg pricing problem. The description of the theory and algorithms is generally informal and intuitive. We redefine the underlying network of the problem, to obtain a compact representation. Then we describe a basic branch-and-bound enumeration procedure. Both concepts are used for complexity issues and for the development of algorithms: establishing NP-hardness, approximability, special cases solvable in polynomial time, and an efficient exact branch-and-bound algorithm.
    Keywords: Economics ;
    Date: 2006
  4. By: D'Haultfoeuille, Xavier; Davezies, Laurent; Fougère, Denis
    Abstract: This paper considers the semiparametric identification of endogenous and exogenous peer effects based on group size variation. We show that Lee (2006)’s linear-in-means model is generically identified, even when all members of the group are not observed. While unnecessary in general, homoskedasticity may be required in special cases to recover all parameters. Extensions to asymmetric responses to peers and binary outcomes are also considered. Once more, most parameters are semiparametrically identified under weak conditions. However, recovering all of them requires more stringent assumptions. Eventually, we bring theoretical evidence that the model is more adapted to small groups.
    Keywords: linear-in-means model; semiparametric identification; social interactions
    JEL: C14 C21 C25
    Date: 2006–10
  5. By: Rachel Levy; Pascale Roux; Sandrine Wolff
    Abstract: This paper analyses the modalities according to which a large European university collaborates with firms by exploring its relational portfolio. We address this issue by exploiting a database listing more than 1000 firms having collaborated with the University Louis Pasteur between 1990 and 2002. First, using multi-correspondence analysis, we derive a four-classes typology of collaborative behaviours, each of them presenting a strong internal coherence. We obtain four distinct collaboration patterms, for which the frequency of interactions and the exclusive vs. open character of the relationships are discriminating features. Second, using a multinomial logit estimation, we show how this diversity is connected to some individual attributes of the firms: size, legal status, industrial sector and geographic distance from the public partner.
    Keywords: Science-industry collaborations; Typology; Industrial collaboration patterns.
    JEL: L21 L31 O32
    Date: 2006

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