nep-net New Economics Papers
on Network Economics
Issue of 2007‒09‒16
eleven papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. The Compromise Game: Two-Sided Adverse Selection in the Laboratory By Juan D Carrillo; Thomas R Palfrey
  2. How Will Online Affiliate Marketing Networks Impact Search Engine Rankings? By Janssen, D.; Heck, E. van
  3. Networking in a lagged economy By Ana Isabel, Moreno Monroy
  4. Public Congestion Network Situations, and Related Games By Kleppe, J.; Reijnierse, J.H.
  5. Gatekeepers in regional networks of innovators By Holger Graf
  6. Co-evolution of firms, industries and networks in space By Anne ter Wal; Ron A. Boschma
  7. Cognitive & Relational Distance in Alliance Networks: Evidence on the Knowledge Value Chain in the European ICT Sector By Olivier BROSSARD (LEREPS-GRES); Jérôme VICENTE (LEREPS-GRES)
  8. The Music Market in the Age of Download By Iacopo Grassi
  9. The effects of competition on price dispersion in the airline industry: a panel analysis By Kris Gerardi; Adam Hale Shapiro
  10. Silicon Valley in the Polder? Entrepreneurial Dynamics, Virtuous Clusters and Vicious Firms in the Netherlands and Flanders By Hulsink, W.; Bouwman, H.; Elfring, T.
  11. Public Employment Services and Employers: How Important are Networks with Firms? By Stefanie Behncke; Markus Frölich; Michael Lechner

  1. By: Juan D Carrillo; Thomas R Palfrey
    Date: 2007–09–03
  2. By: Janssen, D.; Heck, E. van (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: In online affiliate marketing networks advertising web sites offer their affiliates revenues based on provided web site traffic and associated leads and sales. Advertising web sites can have a network of thousands of affiliates providing them with web site traffic through hyperlinks on their web sites. Search engines such as Google, MSN, and Yahoo, consider hyperlinks as a proof of quality and/or reliability of the linked web sites, and therefore use them to determine the relevance of web sites with regard to search queries. In this research we investigate the potential impact of online affiliate marketing networks on the ranking of advertisers? web sites in search results. This article empirically explores how seven different affiliate marketing networks affect the rankings of the advertising web sites within web search engines. The field study followed intensively seven online affiliate marketing networks for twelve weeks after their launch. The results indicate that newly started affiliate networks effectively improve the rankings of advertising web sites in search engine results. Also, it was found that the effects of affiliate marketing networks on search engine rankings were smaller for advertising web sites operating in highly competitive markets. Another finding was that a growth in visitors coming from search engines was present as a result of the improvement of search engine rankings. Finally, the results indicate that cost-benefit metrics associated with affiliate marketing programs, such as the average marketing cost will decrease when the positive effects of affiliate marketing on search engine rankings are taken into account.
    Keywords: Online Affiliate Marketing Networks;Search Engine Rankings;Advertising;Hyperlinks;
    Date: 2007–07–03
  3. By: Ana Isabel, Moreno Monroy
    Abstract: We analyze the vertical, horizontal and transversal networks that a firm can form in the presence of innovation and technological lags. Our empirical case of study uses three industries of the Colombian manufacturing sector. Within this framework we find a rich variety of interorganizational connections. In vertical relationships, a hierarchical relationship only unidirectional material flows happen. Enterprises of the informal and low-segment level of the market cannot establish content-wise vertical relationships, because they have low legitimacy. We find that in highly competitive scenarios with low product differentiation, firms do not engage in any kind of interchange with similar, competing enterprises. We derived that an important determinant of horizontal cooperation is the knowledge of other agents, fueled by standardized practices. As for the relationships of firms with the institutional support system, we find that the access is limited to enterprises operating in the higher segment of the market. The implication is that a subgroup of enterprises does not have access to the support system and indeed have a pessimistic view towards it. The conclusion is that the heterogeneity in the universe of firms is reflected also in their possibilities to engage in networks.
    Keywords: networks; technology; clusters
    JEL: Z13
    Date: 2007–02
  4. By: Kleppe, J.; Reijnierse, J.H. (Tilburg University, Center for Economic Research)
    Abstract: This paper analyzes congestion effects on network situations from a cooperative game theoretic perspective. In network situations players have to connect themselves to a source. Since we consider publicly available networks any group of players is allowed to use the entire network to establish their connection. We deal with the problem of finding an optimal network, the main focus of this paper is however to discuss the arising cost allocation problem. For this we introduce two different transferable utility cost games. For concave cost functions we use the direct cost game, where coalition costs are based on what a coalition can do in absence of other players. This paper however mainly discusses network situations with convex cost functions, which are analyzed by the use of the marginal cost game. In this game the cost of a coalition is defined as the additional cost it induces when it joins the complementary group of players. We prove that this game is concave. Furthermore, we define a cost allocation by means of three egalitarian principles, and show that this allocation is an element of the core of the marginal cost game. These results are extended to a class of continuous network situations and associated games.
    Keywords: Congestion;network situations;cooperative games;public.
    JEL: C61 C71
    Date: 2007
  5. By: Holger Graf (Friedrich-Schiller University Jena, School of Business and Economics)
    Abstract: The internal density of a local network is said to increase the region-specific knowledge-stock and might lead to a comparative advantage. However, it might also lead to a lock-in situation, if local trajectories are directed towards inferior solutions. Accordingly it is argued that successful clusters are characterised by the existence of gatekeepers, i.e. actors that generate novelty by drawing on local and external knowledge. We attempt to answer questions related to the role and characteristics of gatekeepers within regional innovation systems by applying social network analysis based on patent data for four East-German regions. The regional networks appear to be significantly different with respect to the overall degree of interaction and with respect to their relative outward orienta- tion. Concerning the characteristics of gatekeepers, we find that size does not play the major role for being a gatekeeper. It is rather absorptive capacity that matters for gatekeepers. It also shows that public research organisations serve the functions of a gatekeeper to a higher degree than private actors.
    Keywords: Innovator networks; Gatekeeper; R+D co-operation; Scientist mobility
    JEL: O31 Z13 R11
    Date: 2007–09–10
  6. By: Anne ter Wal; Ron A. Boschma
    Abstract: The cluster literature suffers from a number of shortcomings: (1) by and large, cluster studies do not take into account that firms in a cluster are heterogeneous in terms of capabilities; (2) cluster studies tend to overemphasize the importance of place and geographical proximity and underestimate the role of networks which are, by definition, a-spatial entities; (3) most, if not all cluster studies have a static nature, and do not address questions like the origins and evolution of clusters. Our aim is to overcome these shortcomings and propose a theoretical framework on the evolution of clusters. Bringing together bodies of literature on clusters, industrial dynamics, the evolutionary theory of the firm and network theory, we describe how clusters co-evolve with: (1) the industry they adhere to; (2) the (dynamic) capabilities of the firms they contain; and (3) the industry-wide knowledge network they are part of. Based on this framework, we believe the analysis of cluster evolution provides a promising research agenda in evolutionary economic geography for the years to come.
    Keywords: cluster evolution, network dynamics, industrial dynamics, co-evolution, evolutionary economic geography
    Date: 2007–08
    Abstract: This paper deals with the firms’ motives for entering into knowledge partnerships. We start by showing that networking strategies are designed to access external knowledge whilst maintaining at the same time a sufficient level of knowledge appropriation and tradability. The ICT sector (and interplaying ones) is particularly concerned by this accessibility/appropriation trade-off. The questions of modularity, complementarity, compatibility and standardisation are critical in the formation of corporate strategic and technological partnerships. Considering that knowledge in this sector is complex and systemic, we construct a theoretical typology of knowledge partnerships by crossing the levels of cognitive and relational proximity with the knowledge phases of exploration, examination and exploitation. This typology is then tested on empirical data through the use of a classification algorithm. The dataset is based on a sample of strategic alliances in the European ICT sector extracted from SDC Platinum. We show that strategic alliances are clustered in relation to the knowledge phases (exploration, examination, exploitation), and that the alliance categories are characterised by levels of relational and cognitive distance which actually are in keeping with the theoretical predictions.
    Keywords: knowledge networks; knowledge phases; proximities; strategic alliances; ICT sector
    JEL: L22 L24 L63 O31
    Date: 2007
  8. By: Iacopo Grassi (Università Federico II)
    Abstract: Internet, mp3 files, peer-to-peer software and digital technologies for copying have radically modified the music sector. In this paper I present a theoretical model, that investigates the consequences of the appearance of a pirate low quality good (typically a mp3 file) in the music market. In this paper I propose a model of sampling, consider the possibility that the firm modifies its business entering into the low quality segment and investigate the supposed conflict between the recording company, whose profit depends on the CD sold, and the artist, whose profits depend in part on the live performance, the demand of which can increase for the positive externality due to the illegal download of music.
    Keywords: File-sharing, Copyright, Sample Effect, Mp3, Concert
    JEL: L86
    Date: 2007–07
  9. By: Kris Gerardi; Adam Hale Shapiro
    Abstract: This paper analyzes the effects of market structure on price dispersion in the airline industry, using panel data from 1993 through 2006. The results found in this paper contrast with those of Borenstein and Rose (1994), who found that price dispersion increases with competition. We find that competition has a negative effect on price dispersion, in line with the textbook treatment of price discrimination. Specifically, the effects of competition on price dispersion are most significant on routes that we identify as having consumers characterized by relatively heterogeneous elasticities of demand. On routes with a more homogenous customer base, the effects of competition on price discrimination are largely insignificant. We conclude from these results that competition acts to erode the ability of a carrier to price discriminate, resulting in reduced overall price dispersion.
    Date: 2007
  10. By: Hulsink, W.; Bouwman, H.; Elfring, T. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: High-technology starters do not operate in a vacuum and innovation is not a solitary activity. The activities of technology-based firms are embedded in socio-economic networks with other companies, investors, universities, vocational institutions, etc. The geographical proximity of those institutions and infrastructural hubs will partly play a role in determine the location of ICT firms decision. Furthermore, many high-tech companies shape clusters around areas where their major customers are located. The topic of this paper is regional clustering Enright, 1992; Rosenfeld, 1997within the context of Internet and ICT technology. A dynamic model previously developed for the analysis of ICT-entrepreneurship and networking will be applied to make a critical analysis of five ICT-clusters in the Netherlands and Flanders (Northern part of Belgium): the Louvain Technology Corridor, Flanders Language Valley, Amsterdam Alley, Dommel Valley, and Twente.
    Keywords: clusters;high-tech entrepreneurship;networks;Netherlands;Flanders;ICT;
    Date: 2007–07–24
  11. By: Stefanie Behncke (SIAW, University of St. Gallen); Markus Frölich (SIAW, University of St. Gallen, IFAU Uppsala and IZA); Michael Lechner (SIAW, University of St. Gallen, CEPR, ZEW, PSI, IAB and IZA)
    Abstract: This paper examines whether contacts between caseworkers in public employment offices and employers impact on the reemployment chances of the unemployed they counsel. This analysis is made possible through a large administrative dataset on unemployed combined with an extensive survey of caseworkers' characteristics and their strategies. This data was created for evaluating public employment services in Switzerland. We use econometric techniques from the treatment evaluation literature to identify causal effects of a more intense employer focus of the caseworkers. The estimation results indicate that caseworkers who maintain direct contacts to firms achieve higher reintegration rates.
    Keywords: public employment services, new public management, employer focus
    JEL: J68
    Date: 2007–08

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