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on Network Economics |
| By: | Rahmi Ilkiliç (Maastricht University) |
| Abstract: | A tragedy of the commons appears when the users of a common resource have incentives to exploit it more than the socially efficient level. We analyze the situation when the tragedy of the commons is embedded in a network of users and sources. Users play a game of extractions, where they decide how much resource to draw from each source they are connected to. We show that if the value of the resource to the users is linear, then each resource exhibits an isolated problem. There exists a unique equilibrium. But when the users have concave values, the network structure matters. The exploitation at each source depends on the centrality of the links connecting the source to the users. The equilibrium is unique and we provide a formula which expresses the quantities at an equilibrium as a function of a network centrality measure. Next we characterize the efficient levels of extractions by users and outflows from sources. Again, the case of linear values can be broken down source by source. For the case of concave values, we provide a graph decomposition which divides the network into regions according to the availability of sources. Then the efficiency problem can be solved region by region. |
| Keywords: | Tragedy of The Commons, Networks, Nash Equilibrium, Efficiency, Centrality Measures |
| JEL: | C62 C72 D85 Q20 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2008.30&r=net |
| By: | Markus Kinateder (Universitat Autònoma de Barcelona) |
| Abstract: | Delayed perfect monitoring in an infinitely repeated discounted game is modelled by allocating the players to a connected and undirected network. Players observe their immediate neighbors’ behavior only, but communicate over time the repeated game’s history truthfully throughout the network. The Folk Theorem extends to this setup, although for a range of discount factors strictly below 1, the set of sequential equilibria and the corresponding payoff set may be reduced. A general class of games is analyzed without imposing restrictions on the dimensionality of the payoff space. Due to this and the bilateral communication structure, truthful communication arises endogenously only under additional conditions. The model also produces a network result; namely, the level of cooperation in this setup depends on the network’s diameter, and not on its clustering coefficient as in other models. |
| Keywords: | Repeated Game, Delayed Perfect Monitoring, Network, Communication |
| JEL: | C72 C73 D85 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2008.22&r=net |
| By: | Paolo Pin (Università Ca' Foscari di Venezia); Silvio Franz (Universite Paris-Sud 11); Matteo Marsili (The Abdus Salam International Centre for Theoretical Physics) |
| Abstract: | Our societies are heterogeneous in many dimensions such as census, education, religion, ethnic and cultural composition. The links between individuals - e.g. by friendship, marriage or collaboration - are not evenly distributed, but rather tend to be concentrated within the same group. This phenomenon, called imbreeding homophily, has been related to either (social) preference for links with own--type individuals ( choice-based homophily) or to the prevalence of individuals of her same type in the choice set of an individual ( opportunity-based homophily). We propose an indicator to distinguish between these effects for minority groups. This is based on the observation that, in environments with unbiased opportunities, as the relative size of the minority gets small, individuals of the minority rarely meet and have the chance to establish links together. Therefore the effect of choice--based homophily gets weaker and weaker as the size of the minority shrinks. We test this idea across the dimensions of race and education on data on US marriages, and across race on friendships in US schools, and find that: for what concerns education i) opportunity--based homophily is much stronger than choice--based homophily and ii) they are both remarkably stationary in time; concerning race iii) school friendships do not exhibit opportunity-based homophily, while marriages do, iv) choice-based homophily is much stronger for marriages than for friendships and v) these effects vary widely across race. |
| Keywords: | Social Networks, Choice-Based and Opportunity-Based Homophily |
| JEL: | D85 J11 J12 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2008.24&r=net |
| By: | Coralio Ballester (Department of Economics, University of Alicante.); Pablo Brañas-Garza (Department of Economic Theory and Economic History, University of Granada.); María Paz Espinosa (Universidad del País Vasco) |
| Abstract: | This paper analyzes the impact of social integration on cooperative behavior. We show that if the social network shows assortative mixing then conditional cooperation is an equilibrium strategy for altruistic subjects with a high degree of social integration.We provide experimental evidence on the relationship between individuals’ position in a social network and their contributions in a public good game. |
| Keywords: | public good game, social networks, conditional cooperation. |
| JEL: | C91 D64 C72 H41 |
| Date: | 2008–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:gra:wpaper:08/04&r=net |
| By: | Kurucu, Gokce |
| Abstract: | Consider a firm advertising in a job matching agency with the aim of employing the most qualified workers. Its chances of success would be higher for a smaller number of competitor firms advertising in the same job matching agency, i.e. careerbuilder.com. How would the resulting competitive behavior among the firms which are advertising to this job matching agency affect the agency’s optimal pricing behavior? I analyze the optimal market structures and pricing strategies of a monopolist platform in a two-sided market setup in which the agents on each side prefer the platform to be less competitive on their side; that is, a market with negative intra-group network externalities. I find that the equilibrium market structure varies with the extent of negative externalities. If the market’s negative network externalities are substantial, that is, if an agent’s disutility given the size of the agent pool on his side is high (enough), then the profit-maximizing strategy for the matchmaker will be to match the highest types of one side with all of the agents on the other side, by charging a relatively high price from the former side and allowing free entrance for the agents of the latter side. However, if the network externalities on one side are not substantial, then the matchmaker will maximize profits by matching an equal number of agents from each side. This paper thus provides an explanation of the asymmetric pricing schedules in two-sided markets where the matchmaker uses a one-program pricing schedule. |
| Keywords: | two-sided market; externalities |
| JEL: | L11 D42 L12 |
| Date: | 2007–08–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:9746&r=net |
| By: | Schiffer, Eva; Waale, Douglas |
| Abstract: | "Believing that complex problems call for complex solutions and that stakeholders should have a say in policies that concern them, policymakers have strongly promoted the development of forums and organizations made up of many stakeholders to address complex governance issues such as water management. Both developing and developed countries have instituted multistakeholder water governance bodies on local, national, and international levels. However, while the belief is strong that these integrated bodies should improve governance, how and to what extent that actually happens is still unclear, not only because of the complexity of the matter but also due to a lack of appropriate research tools for the analysis of complex governance systems. This paper presents an innovative empirical research tool—Net-Map—developed to better understand multistakeholder governance by gathering in-depth information about governance networks, goals of actors, and their power and influence. Researchers and implementers alike can use Net-Map to collect qualitative and quantitative information in a structured and comparable way. It can be used both as a research tool and as an instrument for organizational development and strategic network planning. A case study on the development of a multistakeholder water governance body in northern Ghana illustrates the application of this research method. The method can be used on many different levels, from the community, to national or even international levels. Net-Map merges characteristics of two existing methods, namely social network analysis and the power mapping tool. Using a participatory approach, interviewees and interviewers together draw a network map of the actors involved in the policy arena and characterize the different kinds of links between the actors. They then add “influence towers,” made of checkers pieces, to transfer the abstract concepts of power and influence into a three-dimensional form. Finally, the interviewee assesses the goal orientation of the different actors (for example, developmental versus environmental or pro versus con a certain intervention). The tool provides an influence network map of the governance situation as well as qualitative and quantitative data about the perceived power and influence of the actors. While the data lend themselves to complex quantitative analysis, this paper mainly focuses on the use of the tool for the purpose of mapping and organizational development. The paper explores how the mapping process itself also stimulates a structured in-depth discussion of crucial issues and ways forward. In Ghana, the method has proven to be interculturally applicable and easy to apply and adapt. Interviewees were excited about their own learning processes throughout the interview. Implicit understanding and concepts were visualized and made explicit so that group members could understand where they agree and differ in their perception of the governance arena." from Author's Abstract |
| Keywords: | Water governance, Social network analysis, Net-Map, Research methodology, Multi-stakeholder governance, |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:772&r=net |
| By: | Vasileios Zikos (Loughborough University) |
| Abstract: | We develop a model of endogenous network formation in order to examine the incentives for R&D collaboration in a mixed oligopoly. Our analysis reveals that the complete network, where each firm collaborates with all others, is uniquely stable, industry-profit maximizing and efficient. This result is in contrast with earlier contributions in private oligopoly where under strong market rivalry a conflict between stable and efficient networks is likely to occur. A key finding of the paper is that state-owned enterprises may be used as policy instruments in tackling the potential conflict between individual and collective incentives for R&D collaboration. |
| Keywords: | Networks, R&D Collaboration, Mixed Oligopoly |
| JEL: | C70 L13 L20 L31 L32 O31 D85 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2008.25&r=net |
| By: | Dinko Dimitrov (University of Bayreuth); Emiliya Lazarova (School of Management and Economics, Queen’s University Belfast) |
| Abstract: | A coalitional matching is a two-sided matching problem in which agents on each side of the market may form coalitions such as student groups and research teams who - when matched - form universities. We assume that each researcher has preferences over the research teams he would like to work in and over the student groups he would like to teach to. Correspondingly, each student has preferences over the groups of students he wants to study with and over the teams of researchers he would like to learn from. In this setup, we examine how the existence of core stable partitions on the distinct market sides, the restriction of agents’ preferences over groups to strict orderings, and the extent to which individual preferences respect common rankings shape the existence of core stable coalitional matchings. |
| Keywords: | Coalitions, Common Rankings, Core, Stability, Totally Balanced Games, Two-Sided Matchings |
| JEL: | C78 J41 D71 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2008.45&r=net |
| By: | Vincent Vannetelbosch (CORE University of Louvain); Ana Mauleon (CORE, University of Louvain); Wouter Vergote (CEREC, Facultés Universitaires Saint-Louis, and CORE, University of Louvain) |
| Abstract: | We adopt the notion of von Neumann-Morgenstern farsightedly stable sets to predict which matchings are possibly stable when agents are farsighted in one-to-one matching problems. We provide the characterization of von Neumann-Morgenstern farsightedly stable sets: a set of matchings is a von Neumann-Morgenstern farsightedly stable set if and only if it is a singleton set and its element is a corewise stable matching. Thus, contrary to the von Neumann-Morgenstern (myopically) stable sets, von Neumann-Morgenstern farsightedly stable sets cannot include matchings that are not corewise stable ones. Moreover, we show that our main result is robust to many- to-one matching problems with responsive preferences. |
| Keywords: | Matching Problem, von Neumann-Morgenstern Stable Sets, Farsighted Stability |
| JEL: | C71 C78 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2008.29&r=net |