nep-net New Economics Papers
on Network Economics
Issue of 2007‒01‒23
nine papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Network Externalities and Durable Goods Consumption: A Test Using Televisions in Rural China By Zhao Rong; Peter Thompson
  2. The Economics of the Internet By Nicholas Economides;
  3. The Impact on Broadband Access to the Internet of the Dual Ownership of Telephone and Cable Networks By Pedro Pereira; Tiago Ribeiro
  4. Endogenous Network Formation In the Laboratory By Celen, Bogachan; Hyndman, Kyle
  5. Competition in a Pure World of Internet Telephony By Christoph Engel
  6. Repeated Games Played in a Network By Markus Kinateder
  7. Strategic Referring in Labor Market Social Networks By Natálie Reichlová; Petr Švarc
  8. Herding with and without Payoff Externalities - An Internet Experiment By Mathias Drehmann; Jörg Oechssler; Andreas Roider
  9. Mobile Virtual Network Operators: Beyond the Hyperbolae By Duarte Brito; Pedro Pereira

  1. By: Zhao Rong (Department of Economics, Florida International University); Peter Thompson (Department of Economics, Florida International University)
    Abstract: We document the existence of a network externality in the purchase of color television sets in rural China in which increases in ownership reduce the propensity of non-owners to purchase. We construct a model of the timing of a durable good in the presence of an externality, and test its key implications using Chinese household survey data.
    Keywords: Durables, network externalities, rural china.
    JEL: D12 R21
    Date: 2007–01
  2. By: Nicholas Economides (Stern School of Business, New York University);
    Abstract: We discuss salient economic aspects of the Internet, including the possible abolition of net neutrality by local broadband access networks as well as potential incompatibilities and degradation of connectivity in the Internet backbone.
    Keywords: Internet, net neutrality, price discrimination, antitrust
    Date: 2007–01
  3. By: Pedro Pereira (Autoridade da Concorrência); Tiago Ribeiro (Indera)
    Keywords: Broadband, Structural Separation, Prices
    JEL: L25 L51 L96
    Date: 2006–08
  4. By: Celen, Bogachan; Hyndman, Kyle
    Abstract: This paper provides an experimental test of a theory of endogenous network formation. A group of subjects face a decision problem under uncertainty. The subjects are endowed with a private information about the fundamentals of the problem, and they are supposed to make a decision one after the other. The key feature of the experiment is that a subject can observe the decisions of the preceding subjects by forming links. A link is costly, yet it enables a subject to observe previous decisions of those to whom he is linked. We show that subjects respond to changes in the information structure and the cost of link formation in the expected manner. However, we also show that behavior systematically deviates from the Bayesian benchmark as subjects form more links than theory predicts. Subjects also exhibit a tendency to conform rather than follow their own information. In order to explain this pattern, we provide an econometric model that posits that subjects care about their relative standing in the group. We show that the modified model provides a better fit than a standard QRE.
    Keywords: Social learning; social interaction; networks; network formation
    JEL: C91 C92 C73 A14 D8
    Date: 2006–12–15
  5. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: From the angle of competition policy, Voice over IP looks like a panacea. It not only brings better service, but it also increases competitive pressure on former telecommunications monopolists. This paper points to the largely overlooked downside. In a pure world of Internet telephony, there would be no charge for individual calls, nor for telephony, as distinct from other services running over the uniform network. Specifically, establishing property rights for either of these would be costly, whereas these property rights were automatic and free of charge in switched telephony. Giving voice over IP providers classic telephone numbers would enhance systems competition with switched telephony. But this would make it more difficult for clients to swap providers. The anti-competitive caller pays principle would extend to IP telephony.
    Keywords: property right, non-linear pricing, pure bundling, club good, cross-subsidisation, packet switched telephony
    JEL: D D43 H41 K21 K23 L13 L15 L43 L86
    Date: 2007–01
  6. By: Markus Kinateder
    Abstract: Delayed perfect monitoring in an infinitely repeated discounted game is modelled by letting the players form a connected and undirected network. Players observe their immediate neighbors' behavior only, but communicate over time the repeated game's history truthfully throughout the network. The Folk Theorem extends to this setup, although for a range of discount factors strictly below 1, the set of sequential equilibria and the corresponding payoff set may be reduced. A general class of games is analyzed without imposing restrictions on the dimensionality of the payoff space. This and the bilateral communication structure allow for limited results under strategic communication only. As a by-product this model produces a network result; namely, the level of cooperation in this setup depends on the network's diameter, and not on its clustering coefficient as in other models.
    Keywords: Repeated Game, Network, Delayed Perfect Monitoring, Communication
    JEL: C72 C73 L14
    Date: 2006–11–23
  7. By: Natálie Reichlová (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Petr Švarc (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: We present a model of job search in which information about job opportunities is available either through direct search at the labor market or through network of socially tied individuals. We consider two cases - altruistic and self-interested agents that maximize their utility function. We show that optimal strategies range between full and no referring cases. Altruistic individuals tend to refer more than selfinterested agents. Strategic referring allows agents alleviate employment variation and leads to higher average utility levels and lower unemployment rates.
    Keywords: agent-based modeling; networks; strategy; job referring
    JEL: J62 J64 D82 D83
    Date: 2006–12
  8. By: Mathias Drehmann (Bank of England); Jörg Oechssler (University of Heidelberg, Department of Economics); Andreas Roider (University of Bonn, Department of Economics and Stanford University)
    Abstract: Most real world situations that are susceptible to herding are also characterized by direct payoff externalities. Yet, the bulk of the theoretical and experimental literature on herding has focused on pure informational externalities. In this paper we experi- mentally investigate the effects of several different forms of payoff externalities (e.g., network effects, first-mover advantage, etc.) in a standard information-based herding model. Our results are based on an internet experiment with more than 6000 subjects, including a subsample of 267 consultants from an international consulting firm. We also replicate and review earlier cascade experiments. Finally, we study reputation e¤ects (i.e., the influence of success models) in the context of herding.
    Keywords: information cascades, herding, network e¤ects, experiment, internet.
    JEL: C92 D8
    Date: 2005–04
  9. By: Duarte Brito (Universidade Nova de Lisboa); Pedro Pereira (Autoridade da Concorrência)
    Abstract: In this article, we discuss several aspects related to the entry of mobile virtual network operators. Some aspects, such as entry barriers and exclusionary practices, relate to the entry process itself. Other aspects, such as prices or the characteristics of the entrant’s product, relate to the consequences of the entry process.
    Date: 2006–10

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