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on Network Economics |
| By: | Ferrari, S.; Verboven, F.L.; Degryse, H.A. (Tilburg University, Center for Economic Research) |
| Abstract: | When new technologies become available, it is not only essential that firms have the correct investment incentives, but often also that consumers make the proper usage decisions. This paper studies investment and usage in a shared ATM network. Be- cause all banks coordinate their ATM investment decisions, there is no strategic but only a pure cost-saving incentive to invest. At the same time, because retail fees for cash withdrawals are regulated to zero at both branches and ATMs, consumers may not have the proper incentives to substitute their transactions from branches to the available ATMs. We develop an empirical model of coordinated investment and cash withdrawal demand, where banks choose the number of ATMs and consumers decide whether to withdraw cash at ATMs or branches. We find that banks substantially underinvested in the shared ATM network and thus provided too little geographic coverage. This contrasts with earlier findings of strategic overinvestment in networks with partial incompatibility. Furthermore, we find that consumer usage of the avail- able ATM network is too low because of the zero retail fees for cash withdrawals at branches. A direct promotion of investment (through subsidies or other means) can improve welfare, but the introduction of retail fees on cash withdrawals at branches would be more effective, even if this does not encourage investment per se. |
| Keywords: | technology investment;usage;efficiency;ATM;empirical industrial or- ganisation and structural econometric models |
| JEL: | L10 L89 G21 L50 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:20081&r=net |
| By: | Dalgaard, Carl-Johan; Strulik, Holger |
| Abstract: | The natural sciences have established a general scaling law that relates metabolism and body size of animals. Recently this association - known as Kleiber's law - has received deep theoretical foundation by network theory and has been fruitfully applied to explain various biological phenomena, in particular ontogenetic growth. Here we derive a similar power law for economic metabolism (energy consumption per capita) and economic size (capital per capita). Invoking the power law we provide a metabolic-energetic founded law of motion for capital per capita. Using data for the U.S. states we test the resulting structural model and find evidence in favor of a scaling parameter, between energy and capital per capita, of about 2/3. |
| Keywords: | Economic Growth, Energy, Metabolism, Power Laws, Networks |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-385&r=net |
| By: | David Masclet Auray (CREM - CNRS - CIRANO); Thierry Pénard (CREM – CNRS - University of Rennes 1) |
| Abstract: | The eBay Feedback Forum is claimed to be a crucial component of the success of eBay. Many empirical studies have found that this feedback system exerts a deterrent effect on the opportunistic behavior the Internet's anonymity may incite buyers and sellers to adopt. The feedback system in place on eBay is however far from being perfect and may be especially vulnerable to strategic ratings (or nonratings) that might reduce the informational content of feedback profiles. This article aims to examine the efficiency of the eBay feedback system, through a set of experiments based on the trust game. Our experimental design consists of four different treatments. The baseline treatment corresponds to a finite repeated simultaneous trust game. The second treatment, called “eBay rating” is identical to the baseline treatment except that we added a second stage in which the players have the opportunity of rating their partner. In this treatment, each participant is given the choice to either evaluate immediately or wait, knowing that only one rating will be accepted. The third treatment, called "Sequential rating" is identical to the “eBay rating” treatment, except that the order in which players evaluate one another is randomly determined by the computer. Finally in the fourth treatment, called “Simultaneous rating”, both players are required to make their rating decisions simultaneously. Our experimental results indicate that the eBay feedback system could be improved by either constraining partners to leave ratings simultaneously or by predetermining the rating sequence. |
| JEL: | C92 C72 L14 L86 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:tut:cremwp:200803&r=net |