nep-net New Economics Papers
on Network Economics
Issue of 2007‒02‒24
eight papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Competition vs. Regulation in Mobile Telecommunications By Stennek, Johan; Tangerås, Thomas P.
  2. Innovazione, network di imprese e conoscenza: quale ruolo per la geographical proximity? By Piergiuseppe Morone; Angela Frasca
  3. Microfoundations of Two-sided Markets: The Payment Card Example By James McAndrews; Zhu Wang
  4. Network Formation and Strategic Firm Behaviour to Explore and Exploit. By Muge Ozman
  5. Virtual Private Networks: stato dell’arte e scenari futuri By Crescenzio Gallo; Michele Perilli
  6. Measuring the Benefits of Mobile Number Portability By Sean Lyons
  7. Power and Ownership Structures among German Companies By Jochen Moebert; Patrick Tydecks
  8. District leaders as open networks: emerging business strategies in Italian industrial districts By Eleonora Di Maria; Stefano Micelli

  1. By: Stennek, Johan; Tangerås, Thomas P.
    Abstract: This paper questions whether competition can replace sector-specific regulation of mobile telecommunications. We show that the monopolistic outcome prevails independently of market concentration when access prices are determined in bilateral negotiations. A light-handed regulatory policy can induce effective competition. Call prices are close to the marginal cost if the networks are sufficiently close substitutes. Neither demand nor cost information is required. A unique and symmetric call price equilibrium exists under symmetric access prices, provided that call demand is sufficiently inelastic. Existence encompasses the case of many networks and high network substitutability.
    Keywords: access price competition; entry; network competition; network substitutability; regulation; two-way access
    JEL: L51 L96
    Date: 2007–02
  2. By: Piergiuseppe Morone; Angela Frasca
    Date: 2007–01
  3. By: James McAndrews; Zhu Wang
    Abstract: This paper provides a theory of two-sided market dynamics with arguably better microfoundations. These alternative microfoundations focus on observable heterogeneities of both sides of the market in a competitive framework. The theory is rich in empirical predictions and is less dependent on a particular form of imperfect competition than other approaches. Our findings in the payment card example point to adoption costs and the distribution of consumer incomes and firm sizes as the key determinants of the shares of costs borne by each side. This result provides clear implications for industry dynamics and sheds light on the puzzle of asymmetric pricing.
    Keywords: Technology Adoption; Two-sided Market; Asymmetric Pricing
    JEL: L10 D40 O30
    Date: 2007–01
  4. By: Muge Ozman
    Abstract: The aim of this paper is to investigate the effect of technological opportunities and knowledge tacitness on inter-firm network formation, under two different industry regimes. In the first regime environment is stable and the aim of firms is to exploit knowledge. In this case, they attribute more value to repeated interactions with geographically close firms. In the second regime, there is environmental turbulence, which increases the value of access to novel information from distant partners for exploration. The question addressed is, under these regimes how do technological opportunities and knowledge tacitness influence structure of networks? The main contribution of the paper different from previous work is that it explicitly models the effect of history between two firms on networks that form. A simulation model is carried out where firms select partners and learn from them, which further shapes their selection process. The results reveal that in both regimes richer technological opportunities and higher tacitness generates local and global star firms depending on the parameter range.
    Date: 2007
  5. By: Crescenzio Gallo; Michele Perilli
    Date: 2007–01
  6. By: Sean Lyons (Department of Economics, Trinity College)
    Abstract: Increasing numbers of countries require mobile telephone networks to offer mobile number portability (MNP). MNP allows customers who wish to switch mobile operator to keep their mobile numbers, avoiding the costs of switching to new numbers. Ex ante assessments suggest that MNP should reduce switching costs and strengthen competition. In this paper, we test MNP’s impact on market outcomes using international time-series cross-section data. We find that MNP significantly increases average mobile telephony retail prices and churn (a proxy for switching).
    JEL: L51 L96
    Date: 2006–05
  7. By: Jochen Moebert (Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology)); Patrick Tydecks
    Abstract: The literature on ownership structures made continual use of notions such as cross-holdings and pyramids which are closely related to the vastly increasing network literature. We propose to transfer successfully applied network methods to the corporate control and corporate governance branch as well. For instance, in this paper we use the MAN-classification scheme, centrality concepts, and network graphs to investigate a unique data set containing 2784 companies of the ownership structure in Germany in 2006. Furthermore, the power or centrality of companies is explained by various company variables.
    Keywords: network, ownership structure, corporate control, power, financial linkages
    JEL: G32 L14
    Date: 2007–02
  8. By: Eleonora Di Maria (University of Padova); Stefano Micelli (University of Venice)
    Abstract: Italian industrial districts are no longer self-contained systems of small firms, where firms' competitiveness is the result of physical proximity and links with global economy are limited to export sales. A new generation of firms is taking the lead, reshaping the form of districts through their innovative strategies focused on R&D, design and ICT. Most of these firms are leaders within their markets and organize their value chains by coupling district knowledge and competencies with opportunities offered by globalization processes. The rise of these open networks contributes to the transformation of industrial districts and the real drivers of the district firm's competitiveness. Based on a survey of 650 Italian SMEs from 41 Italian districts, the paper describes the characteristics of this new firm model, compared to the traditional district one. The paper also discusses implications for districts in terms of innovation dynamics and governance.
    Keywords: district firms, open networks, global value chain, innovation, governance
    Date: 2007–02

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