nep-net New Economics Papers
on Network Economics
Issue of 2007‒05‒12
seven papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Networks, Standards and Intellectual Property Rights By Vitor Trindade; Johannes Moenius
  2. Open Source Software Development, Innovation, and Coordination Costs By Thierry Warin; Jean-Philippe Bonardi
  3. Academic Research, Social Interactions and Economic Growth By Carillo, Maria Rosaria; Papagni, Erasmo
  4. An Economic Analysis of Platform Sharing By Arghya Ghosh; Hodaka Morita
  5. Economic Geography and the Evolution of Networks By Johannes Gluckler
  6. Effects of social interactions on scientists' productivity By Carillo, Maria Rosaria; Papagni, Erasmo; Capitanio, Fabian
  7. The 3G Standard Setting Strategy and Indigenous Innovation Policy in China: Is TD-SCDMA a Flagship? By Hui Yan

  1. By: Vitor Trindade (Department of Economics, University of Missouri-Columbia); Johannes Moenius
    Abstract: This paper reviews issues that lie at the intersection between intellectual property rights (IPR) and network effects, especially in the context of the global economy. Some of the relevant questions are: (1) How do IPR influence the provision of goods exhibiting network effects? (2) How do network effects in turn influence the creation of intellectual property? And (3) how do aspects of the global economy interact with both IPR and network effects? We synthesize what is known from the existing literature to answer these questions.
    Keywords: Intellectual Property Rights, Network Effects, Globalization, Standards, Social Networks, Software Piracy
    JEL: D85 F12 F13 F14 L14 O34
    Date: 2007–03–27
  2. By: Thierry Warin; Jean-Philippe Bonardi
    Abstract: Open source is often presented as a very promising governance structure for the development of software in the Internet world. One of its greatest advantages is that it enables and integrates the flow of innovation coming from many unrelated developers. We extend previous inquiries by showing that, due to information communication problems, this governance structure is in fact more efficient for the development of incremental innovations rather than radical innovations. Implications are drawn in terms of the future of the open source system, the economics of innovation and public policy.
    Date: 2007–01
  3. By: Carillo, Maria Rosaria; Papagni, Erasmo
    Abstract: In this paper we investigate the aggregate implications of social interactions for basic research and economic growth. In particular, we focus on the effects of both the size of the scientific community and the strenght of social exchange among researchers on science productivity and uneven growth. Basic research is modelled as a contest which awards a real prize to the winner and nothing to the losers. Agents are endowed with heterogeneous talent and discoveries are uncertain events which depend on the talent and effort of individuals and on their aggregate values. A CES index of the distribution of both talent and effort summarizes the features of the interactions of the scientific community from which increasing returns may derive. According to the model in equilibrium scientists endowed with higher ability put higher effort into their job, which justifies the famous Lotka effect on the skewed distribution of scientific publications. Social interactions among scientists cause increasing returns to the number of scientists and multiple equilibria, among which a poverty trap with zero knowledge production and zero growth may emerge. Since only the most talented agents join the science sector, economic growth depends positively on its size. Sensitivity analysis of the model shows that if the scientific community is made by on average less complementary people and its size is greater than a threshold then in equilibrium this community will be larger and the growth rate greater. The same effects derive both from a stronger influence of the scientific environment on the aggregate probability of success in scientific races and from a higher share of real resources devoted to basic research.
    JEL: Z13 J24 O41
    Date: 2007–05–04
  4. By: Arghya Ghosh; Hodaka Morita
    Abstract: We explore the managerial implications and economic consequences of platform sharing under models of horizontal and vertical product differentiation. By using a common platform across different products, firms can save on fixed costs for platform development. At the same time, platform sharing imposes restrictions on firms' ability to differentiate their products, and this reduces their profitability. It might appear that platform sharing across firms makes consumers worse off because firms cooperate in their product development processes to maximize their joint profit. We find, however, that platform sharing across firms benefits consumers in our framework because it intensifies competition in our horizontal differentiation model, and because it increases the quality of the lower-end product in our vertical differentiation model. We also show new channels through which a merger makes consumers worse off in the presence of platform sharing.
    JEL: D40 L10 L40 M20
    Date: 2007–04
  5. By: Johannes Gluckler
    Abstract: An evolutionary perspective on economic geography requires a dynamic understanding of change in networks. This paper explores theories of network evolution for their use in geography and develops the conceptual framework of geographical network trajectories. It specifically assesses how tie selection constitutes the evolutionary process of retention and variation in network structure and how geography affects these mechanisms. Finally, a typology of regional network formations is used to discuss opportunities for innovation in and across regions.
    Keywords: evolution, network trajectory, evolutionary economic geography, social network analysis, innovation
    Date: 2007–04
  6. By: Carillo, Maria Rosaria; Papagni, Erasmo; Capitanio, Fabian
    Abstract: Recent economic research has focused on the economic effects of the social environment. In the economic literature, important phenomena are considered, at least in part, as results of the individual's social environment. There is a similar revival of interest among economists who analyse the world of science and basic research. In this case as well, the environment plays a key role in the agent's behaviour. This paper aims to analyse theoretically and empirically the influence of social interactions on scientists' productivity. In this respect, we build a model of a contest in science that provides us with a framework for empirical analysis. The equilibrium solution of the model tells us that a scientist's productivity depends on the social environment in terms of the community size and quality of colleagues. In the econometric analysis we investigate the aggregate importance of this phenomenon through the analysis of data on publications in four scientific fields of seven advanced countries. We find that social interactions among researchers have positive effects on a scientist's productivity and that there is a U-shaped relation between the size of a scientific network and individual productivity. We interpret this result as providing evidence for threshold externalities and increasing returns to scale.
    JEL: Z13
    Date: 2007–04–24
  7. By: Hui Yan
    Abstract: In the time of “network economy”, industries and the public have stressed several “battles for dominance” between two or more rival technologies, often involving well-known firms operating in highly visible industries. In this paper, we are going to focus on the Chinese self-developed standard TD-SCDMA to perceive the implication and target of the nation’s policy and strategy. The motivation of the research starts from the interesting fact we observed: TD-SCDMA is named as the Chinese made standard, however the Chinese hold core patent technology is still about 7%, while most of the rest part is still taken by other foreign companies. The “faultage” between the small share reality and a self made standard sweet dream implies a well plotted strategy. In order to understand it, we firstly raise the question of why the Chinese government postpones the 3G decision again and again. Then we go further to probe why the standard-setting of TD-SCDMA has aroused wide attention as a strategic tool to fulfill “indigenous innovation”, and finally becomes part of national science and technology policy to increase international competitiveness? We are going to use economics theories to understand the essence of the creation of TD-SCDMA, and its relation to China’s interests.
    Keywords: 3G; Standard; Innovation: China
    JEL: O31 L96
    Date: 2007

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