nep-net New Economics Papers
on Network Economics
Issue of 2008‒04‒21
seven papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Managers, Firms and (Secret) Social Networks: The Economics of Freemasonry By Braggion, F.
  2. Agglomerative Magnets and Informal Regulatory Networks: Electricity Market Design Convergence in the USA and Continental Europe By Jens Weinmann
  3. "Substituability between Mobile and Fixed Telephones: Evidence and Implications for India" By Muttur Ranganathan Narayana
  4. Unbundling and Incumbent Investment in Quality Upgrades and Cost Reduction By João Vareda
  5. Price Skewness and Competition in Multi-Sided Markets By JULLIEN, Bruno
  6. A percolation model of eco-innovation diffusion: the relationship between diffusion, learning economies and subsidies By Simona Cantono; Gerald Silverberg
  7. Efficiency Enhancing Taxation in Two-sided Markets By Kind, Hans Jarle; Koethenbuerger, Marko; Schjelderup, Guttorm

  1. By: Braggion, F. (Tilburg University, Center for Economic Research)
    Abstract: This paper studies the relationships between managers? a? liations with Freema- sonry and companies' performance. Using a unique data set of 410 companies quoted on the London Stock Exchange between 1895 and 1902, I find that Masonic managers were associated with greater access to credit in small and young companies whose se- curities where traded over the counter. These companies earned higher profits, but the effect is not statistically significant. On the other hand, large publicly quoted corpora- tions that were managed by Freemasons did not obtain greater access to credit; they had lower profiys and lower Tobin's Q. These findings help to understand how social networks are related to companies' performances. Although social networks help to resolve agency problems between lenders and borrowers in firms that have difficulties in obtaining debt finance, in larger publicly quoted companies they are associated with worse agency conflicts between managers and shareholders and with worse economic performance.
    Keywords: Freemasons;Social Networks;Access to Credit
    JEL: G30 G39 N23
    Date: 2008
  2. By: Jens Weinmann
    Abstract: The absence of one broadly accepted design template for liberalised electricity markets induces regulatory competition and institutional diversity. Focussing on continental Europe and the USA, this analysis explores how agents and structures accelerate or impede the move to one standard market design in the electricity sector. It reveals that market design convergence in Europe is driven by the 'Florence Consensus,' a tripartite coalition between the European Commission fostering European integration and the internal market, informal regulatory networks between grid operators, standardisation authorities and regulators, who have been coordinating their actions in the 'Florence Forum,' and epistemic communities exemplified in the Florence School of Regulation. In contrast, the United States' Federal Energy Regulatory Commission lacks support among politicians, many states' public utility commissions, the neo-liberal intelligentsia and even industrial lobbying groups to effectively push for a standardised market design. However, design convergence in the USA may be induced by the gradual expansion of multi-state markets operated by regional transmission organisations.
    Keywords: Electricity, Deregulation, Regulatory Competition, Policy Diffusion
    JEL: K23 L16 L43 L51 L94 Q48
    Date: 2007–04–04
  3. By: Muttur Ranganathan Narayana (Centre for International Research on the Japanese Economy, Faculty of Economics, The University of Tokyo and Centre for Economic Studies and Policy Institute for Social and Economic Change)
    Abstract: This paper estimates the determinants of household subscription to mobile and fixed phones in India based on a binary logit model and using the household sample survey data from the Karnataka State in South India. The determinants include access and usage price of mobile and fixed phone services, income, age, social caste, education, and occupation of head of household and family size. Using the econometric estimates, marginal effects and elasticities of probability of subscription to mobile services are computed. Elasticities are distinguished by own price elasticity, cross-price elasticity, and income elasticity. Estimated cross price elasticity offers empirical evidence for substitutability rather than complementarity between fixed and mobile phone services. This evidence is symmetric in mobile and fixed phone models. The implications of empirical results are shown to have relevance for on-going policy discussion on subsidization under Universal Service Obligation and Access Deficit Charge.
    Date: 2008–03
  4. By: João Vareda (Autoridade da Concorrência)
    Abstract: We study the investment of a telecommunications incumbent in quality and in cost reduction when an entrant can use its network through unbundling of the local loop. We fi?nd that unbundling may lower incentives for quality improvements, but raises incentives for cost reduction. Therefore, it is not true that all types of investment are crowded out with unbundling. If the regulator can commit to a socially optimal unbundling price before investment, the incumbent makes both types of investment. In the absence of commitment, the incumbent will not invest, so that unbundling regulation may lower welfare as compared to no regulation.
    Keywords: Access Pricing, Telecommunications Regulation; Unbundling; Investments; Quality upgrades; Cost reduction; Commitment
    JEL: D92 L43 L51 L96
    Date: 2007–11
  5. By: JULLIEN, Bruno
    Date: 2008–03
  6. By: Simona Cantono (Department of Economics, University of Turin); Gerald Silverberg (UNU-MERIT)
    Abstract: An obstacle to the widespread adoption of environmentally friendly energy technologies such as stationary and mobile fuel cells is their high upfront costs. While much lower prices seem to be attainable in the future due to learning curve cost reductions that increase rapidly with the scale of diffusion of the technology, there is a chicken and egg problem, even when some consumers may be willing to pay more for green technologies. Drawing on recent percolation models of diffusion by Solomon et al. [7], Frenken et al. [8] and Höhnisch et al. [9], we develop a network model of new technology diffusion that combines contagion among consumers with heterogeneity of agent characteristics. Agents adopt when the price falls below their random reservation price drawn from a lognormal distribution, but only when one of their neighbors has already adopted. Combining with a learning curve for the price as a function of the cumulative number of adopters, this may lead to delayed adoption for a certain range of initial conditions. Using agent-based simulations we explore when a limited subsidy policy can trigger diffusion that would otherwise not happen. The introduction of a subsidy policy seems to be highly effective for a given high initial price level only for learning economies in a certain range. Outside this range, the diffusion of a new technology either never takes off despite the subsidies, or the subsidies are unnecessary. Perhaps not coincidentally, this range seems to correspond to the values observed for many successful innovations.
    Keywords: Innovation diffusion, learning economies, percolation, networks, heterogeneous agents, technology subsidies, environmental technologies
    JEL: C61 H23 O32 O33
    Date: 2008
  7. By: Kind, Hans Jarle (Department of Economics, Norwegian School of Economics and Business Administration (NHH)); Koethenbuerger, Marko (Center for Economic Studies, Ludwig-Maximilians-Universität); Schjelderup, Guttorm (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: This paper examines the efficient provision of goods in two-sided markets and characterizes optimal specific and ad-valorem taxes. We show that (i) a monopoly may have too high output compared to the social optimum; (ii) output may be reduced by imposing negative value-added taxes (subsidy) or positive specific taxes.
    Keywords: Market Structure and Pricing; Efficiency; Optimal Taxation; Incidence
    JEL: D40 D43 H21 H22 L13
    Date: 2008–01–25

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