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on Network Economics |
| By: | Nier, Erlend (Bank of England); Yang, Jing (Bank of England); Yorulmazer, Tanju (Bank of England); Alentorn, Amadeo (University of Essex) |
| Abstract: | Systemic risk is a key concern for central banks charged with safeguarding overall financial stability. In this paper we investigate how systemic risk is affected by the structure of the financial system. We construct banking systems that are composed of a number of banks that are connected by interbank linkages. We then vary the key parameters that define the structure of the financial system - including its level of capitalisation, the degree to which banks are connected, the size of interbank exposures and the degree of concentration of the system - and analyse the influence of these parameters on the likelihood of contagious (knock-on) defaults. First, we find that the better capitalised banks are, the more resilient is the banking system against contagious defaults and this effect is non-linear. Second, the effect of the degree of connectivity is non-monotonic, that is, initially a small increase in connectivity increases the contagion effect; but after a certain threshold value, connectivity improves the ability of a banking system to absorb shocks. Third, the size of interbank liabilities tends to increase the risk of knock-on default, even if banks hold capital against such exposures. Fourth, more concentrated banking systems are shown to be prone to larger systemic risk, all else equal. In an extension to the main analysis we study how liquidity effects interact with banking structure to produce a greater chance of systemic breakdown. We finally consider how the risk of contagion might depend on the degree of asymmetry (tiering) inherent in the structure of the banking system. A number of our results have important implications for public policy, which this paper also draws out. |
| Keywords: | Networks; financial stability; contagion; liquidity risk. |
| JEL: | C63 C90 G28 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0346&r=net |
| By: | Elisabetta Iossa; Francesca Stroffolini |
| Abstract: | We study how vertical integration in regulated network industries affects the acquisition and transmission of socially valuable information on demand. We consider a regulated upstream monopoly with downstream unregulated Cournot competition and demand uncertainty. Demand information serves to set the access price and to foster competition in the unregulated segment but demand realizations can be observed at some cost only by the upstream monopolist; information acquisition is also unobservable. We show that vertical integration favours acquisition of demand information because of the transmission of information generated by the public nature of the regulatory mechanism. This holds both when access to information is easier for the upstream firm and when it is easier for downstream firms. |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:edb:cedidp:08-03&r=net |
| By: | Oliver Budzinski (Faculty of Business Administration and Economics, Philipps Universitaet Marburg); Janina Satzer (Faculty of Business Administration and Economics, Philipps Universitaet Marburg) |
| Abstract: | Despite still being younger than a decade, the theory of multisided market has offered numerous valuable insights for the analysis of non-ordinary industries in which a supplier serves two distinct customer groups that are indirectly interrelated by externalities. Examples include payment systems, matching agencies, commercial media and software platforms. However, professional sports markets have largely been neglected so far in this kind of research although they possess the characteristics of multisided markets. We contribute to filling this gap by describing the platform elements of professional suppliers of sports events and outlining problems where an application of this theoretical framework is likely to provide valuable insights and to add to the existing knowledge. Among these problems are integrative pricing strategies of sports clubs towards such different customer groups like attendees, broadcasters, sponsors, etc., including their welfare and antitrust implications, design decisions of sports associations in order to promote positive feedback loops among the customer groups as well as strategies to reinforce positive externalities among customer groups and alleviate negative ones. |
| Keywords: | sports economics, two-sided markets, multisided platforms, professional sports business, pricing strategies, broadcasting rights |
| JEL: | L83 L82 L13 M21 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:200811&r=net |
| By: | Andreas Eisingerich (Tanaka Business School, Imperial College London); Oliver Falck (Ifo Institute for Economic Research and CESifo); Stephan Heblich (Max Planck Institute of Economics); Tobias Kretschmer (Institute for Communication Economics, LMU Munich) |
| Abstract: | Industrial clusters develop regionally along the industry's lifecycle and typically exist over many product generations. In order to maintain their innovativeness, they have to develop and adjust along the industry lifecycle. We conduct 142 depth face-to-face interviews in clusters across two continents to examine the drivers of a cluster's innovativeness along the industry lifecycle. The results from our interviews suggest that the impact of key drivers of cluster innovativeness change depending on the stage of a cluster's underlying industry lifecycle. Classifying clusters as either being adolescent (information technology, biotechnology) or mature (automotive, chemicals), our regression analyses show a changing influence of cluster patterns along the industry lifecycle on a firm's innovativeness. Specifically, we analyze the impact of interorganizational network strength, openness, university collaboration, and intrapreneurship on radical innovation across adolescent and mature clusters. Implications for research and policy makers are discussed. |
| Keywords: | Cluster, Industry Lifecycle, Innovation |
| JEL: | O18 R12 L6 |
| Date: | 2008–09–11 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2008-070&r=net |