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on Network Economics |
| By: | Kazumichi, Iwasa; Kikuchi, Toru |
| Abstract: | Indirect network effects exist when the utility of consumers is increasing in the variety of complementary software products available for use with an electronic hardware device. In this note, we examine how trade liberalization affects production structure in the presence of indirect network effects. For these purposes we construct a simple two-country model of trade with two incompatible hardware technologies. It is shown that, given that both types of hardware exist before trade liberalization, liberalization may reduce the variety of hardware technology via intensified network effects. It is also shown that, contrary to the findings of previous studies, some consumers may become worse off as the result of trade. In other words, trade liberalization, which forms the basis for a greater variety of software products, may work as a catalyst for Pareto inferior outcomes. |
| JEL: | F12 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:8662&r=net |
| By: | Natalie Svarcova (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Petr Svarc (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic) |
| Abstract: | Using a simple computational model, we study consequences of herding behavior in population of agents connected in networks with different topologies: random networks, small-world networks and scale-free networks. Agents sequentially choose between two technologies using very simple rules based on the previous choice of their immediate neighbors. We show that different seeding of technologies can lead to very different results in the choice of majority of agents. We mainly focus on the situation where one technology is seeded randomly while the other is directed to targeted (highly connected) agents. We show that even if the initial seeding is positively biased toward the first technology (more agents start with the choice of the first technology) the dynamic of the model can result in the majority choosing the second technology under the targeted hub approach. Even if the change to majority choice is highly improbable targeted seeding can lead to more favorable results. The explanation is that targeting hubs enhances the diffusion of the firm’s own technology and halts or slows-down the adoption of the concurrent one. Comparison of the results for different network topologies also leads to the conclusion that the overall results are affected by the distribution of number of connections (degree) of individual agents, mainly by its variance. |
| Keywords: | technology adoption, simulation, networks, herding behavior |
| JEL: | D71 D74 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2008_07&r=net |
| By: | Michael, Cayley |
| Abstract: | Within the field of social capital study, concerns have been expressed that deviations from a fundamental understanding that social capital is captured from embedded resources in social networks may reduce the intellectual enterprise to a catch all fad (Lin, Cook, Burt, 1999). This paper is an argument that sometime in 2004, when broadband internet connections became more prevalent than those of less capacity, individuals became empowered as our most intense form of media. Scaled up effects of the Individual as Medium including: • increased information flow, • exertion of influence, • expansion of social credentials and reinforcement of identity and recognition, are consistent with a network theory of social capital. Corporations are exposed to new risks and opportunities due to these scaled up forms of social capital and they require new methods to manage them. Social Capital Value Add is introduced as such a new method, designed to link the pioneering intellectual enterprise of social capital to value based management and the priorities of marketers. A plausible SCVA valuation method is proposed to demonstrate how these links may be articulated in a way that is meaningful for investors and corporate managers. |
| Keywords: | "social capital"; "corporate value"; "Web 2.0"; "corporate valuation"; "social media"; "memetic brand"; brand |
| JEL: | M1 Z13 G3 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:8641&r=net |
| By: | Dan Kovenock; Brian Roberson |
| Abstract: | This paper examines a multi-player and multi-front Colonel Blotto game in which one player, A, simultaneously competes in two disjoint Colonel Blotto games, against two separate opponents, 1 and 2. Prior to competing in the games, players 1 and 2 have the opportunity to form an alliance to share their endowments of a one-dimensional resource (e.g., troops, military hardware, money). This paper examines “non-cooperative” alliances in which only individually rational ex ante transfers of the resource are allowed. Once these transfers take place, each alliance member maximizes his payoff in his respective Colonel Blotto game, given his resource constraint and player A’s allocation of its endowment across the two games. No ex post transfers are enforceable. Remarkably, there are several ranges of parameters in which endogenous unilateral transfers take place within the alliance. That is, one player gives away resources to his ally, who happily accepts the gift. Unilateral transfers arise because they lead to a strategic shift in the common opponent’s force allocation away from the set of battlefields of the player making the transfer, towards the set of battlefields of the player receiving the transfer. Our result demonstrates that there exist unilateral transfers for which the combination of direct and strategic effects benefits both allies. This stands in stark contrast to the previous literature on alliances (see Sandler and Hartley, 2001), which relies on the assumption of pure or impure public goods. |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:pur:prukra:1207&r=net |
| By: | Kai A. Konrad; Dan Kovenock |
| Abstract: | The formation of an alliance in conflict situations is known to suffer from a collective action problem and from the potential of internal conflict. We show that budget constraints of an intermediate size can overcome this strong disadvantage and explain the formation of alliances. |
| Keywords: | alliance formation puzzle, military conflict, budget constraints |
| JEL: | D72 D74 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:pur:prukra:1209&r=net |