nep-net New Economics Papers
on Network Economics
Issue of 2008‒07‒30
four papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Critical Mass By Michal Grajek; Tobias Kretschmer
  2. Network formation with decreasing marginal benefits of information By Kris De Jaegher; Jurjen Kamphorst
  3. Successful Patterns of Scientific Knowledge Sourcing: Mix and Match By Aschhoff, Birgit; Sofka, Wolfgang
  4. Measuring the Importance of Labor Market Networks By Judith K. Hellerstein; Melissa McInerney; David Neumark

  1. By: Michal Grajek (ESMT European School of Management and Technology); Tobias Kretschmer (Ludwig-Maximilians-Universität München)
    Abstract: This paper develops a structural model of demand for a network good to provide a rigorous definition of critical mass. Using simulations, we demonstrate that our model of critical mass can be operationalized easily and can generate theoretically grounded insights about critical mass phenomena identified in empirical settings. We then propose a number of extensions to illustrate the flexibility of our model.
    Keywords: critical mass, network effects, diffusion of innovations, compatibility
    JEL: C53 L14 M37
    Date: 2008–06–13
  2. By: Kris De Jaegher; Jurjen Kamphorst
    Abstract: In the two-way flow connections model of the seminal paper by Bala and Goyal (2000a), the marginal benefit of obtaining the information of one more player is constant. However, it is plausible that the marginal benefit of such information is decreasing. This paper explores the consequences for the stability of networks of such decreasing marginal benefits. We start by characterizing the strict Nash networks for both the case of constant and the case of decreasing marginal benefits. Using this characterization, we next explore how the set of strict Nash networks differs for the two cases. The results and intuition tells us that long diameter networks have certain features which make them relatively more likely to be stable under decreasing marginal benefits of information as compared to short diameter networks.
    Keywords: Network Formation, Concave Benefits, Two-Way Flow Model
    JEL: C72 D85
    Date: 2008–07
  3. By: Aschhoff, Birgit; Sofka, Wolfgang
    Abstract: Valuable knowledge emerges increasingly outside of firm boundaries, in particular in public research institutions and universities. The question is how firms organize their interactions with universities effectively to acquire knowledge and apply it successfully. Literature has so far largely ignored that firms may combine different types of interactions with universities for optimizing their collaboration strategies. We argue conceptually that firms need diverse (broad) and highly developed (deep) combinations of various interactions with universities to maximize returns from these collaborations. Our empirical investigation rests upon a survey of more than 800 firms in Germany. We find that both the diversity and intensity of collaborative engagements with universities propel innovation success. However, broadening the spectrum of interactions is more beneficial with regard to innovation success. Applying latent class cluster analysis we identify four distinct patterns of interaction. Our findings show that formal forms of interaction (joint/contract) research provide the best balance between joint knowledge development and value capture.
    Keywords: Technology transfer, industry-science links, open innovation, university knowledge
    JEL: C30 D83 O32
    Date: 2008
  4. By: Judith K. Hellerstein; Melissa McInerney; David Neumark
    Abstract: We specify and implement a test for the importance of network effects in determining the establishments at which people work, using recently-constructed matched employer-employee data at the establishment level. We explicitly measure the importance of network effects for groups broken out by race, ethnicity, and various measures of skill, for networks generated by residential proximity. The evidence indicates that labor market networks play an important role in hiring, more so for minorities and the less-skilled, especially among Hispanics, and that labor market networks appear to be race-based.
    JEL: J15 J61
    Date: 2008–07

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