nep-net New Economics Papers
on Network Economics
Issue of 2008‒10‒13
four papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Innovation, convergence and the role of regulation in the Netherlands and beyond By Paul de Bijl; Martin Peitz
  2. Quality provision under referral consumption By Noemí Navarro
  3. Consumption Externalities and Equilibrium Dynamics with Heterogenous Agents By Kazuo Mino; Yasuhiro Nakamoto
  4. Does Inter-Organizational Networking Support Regional Development? Evidence from a Survey of Finnish Enterprises (in Finnish with an English abstract/summary) By MIKA PAJARINEN; PETRI ROUVINEN

  1. By: Paul de Bijl; Martin Peitz
    Abstract: In the light of converging services for voice, data, and video, this paper discusses the challenges for telecommunications regulation from a European perspective. The Netherlands, a country with excellent conditions for facilities-based competition, is discussed as a case in point. With dynamic issues at the heart of the debate, the role of regulation and government intervention more generally is to create and possibly to sustain conditions among operators to upgrade their networks and to provide innovative services. A fresh look at current regulation suggests that an overhaul may be needed.
    Keywords: telecommunications regulation; convergence; network access; IP networks; competition; innovation; NGN networks
    JEL: L96 L5
    Date: 2008–07
  2. By: Noemí Navarro (Department of Economic Theory, Universidad de Málaga)
    Abstract: I analyze incentives for provision of quality in a market for an experience good. There is a single producer who is choosing quality and price taking into account three features. First, consumers do not know the quality of the good before purchasing it but use their acquaintances in order to obtain information about it. Second, consumers assign a common initial willingness-to-pay before information transmission takes place. Third, the social network of acquaintances is known to the producer. I define an equilibrium concept taking the point of view of the producer and characterize the set of resulting equilibria for any possible social network. One implication from this characterization is that, if there is a maximal level of quality (given by technological knowledge) that can be chosen, the producer may choose lower levels of quality as the population of consumers is getting more internally connected. This is due to free-riding of information by consumers when quality levels are low. In addition, I identify necessary and sufficient conditions for a new producer arriving in the market to provide a lower quality level though a higher price than the initial producer.
    Keywords: Networks, word-of-mouth information, referral consumption
    JEL: D4 D8 L1
    Date: 2008–10
  3. By: Kazuo Mino (Graduate School of Economics, Osaka University); Yasuhiro Nakamoto (Graduate School of Economics, Osaka University)
    Abstract: This paper explores the effect of consumption externalities on equilibrium dynamics of a standard neoclassical growth model in which there are two types of agents. To emphasize the presence of heterogenous agents, we distinguish intergroup consumption externalities from intragroup consumption externalities. We show that if the intragroup externalities dominates the intrergroup external effects, then the steady state equilibrium satisfies saddle-point stability and the equilibrium path of the economy is uniquely determined. In contrast, if the intergroup external effects of consumption are strong enough, the steady-state equilibrium is either unstable or locally indeterminate. Based on the analytical as well as numerical considerations, we give intuitive implications of stability conditions.
    Keywords: Consumption externalities, Equilibrium determinacy, Heterogeneous agents, Progressive taxation
    JEL: E52 O42
    Date: 2008–09
    Abstract: ABSTRACT : Three fourths of Finnish business enterprises have relationships that are deeper than those associated with normal market transactions, i.e., they are involved in inter-organizational networking. Regionally networking is more commonplace in North Savo, North Karelia/Kainuu, Central Finland and Lapland/Northern Ostrobothnia. Connections to other firms is the most prevalent and qualitatively most important type of networking. Net-working is predominantly a local phenomenon, particularly when it comes to firms’ partner-ships with educational and research institutions as well as public bodies. Networking may be associated with better firm profitability in low-tech industries. Participating in a national cluster may be associated with firms’ better growth prospects. In the absence of functioning local markets for some productive inputs, being engaged in inter-organizational networking may be a necessary conditions for firms’ survival.
    JEL: D21 L14 L22 L25
    Date: 2008–10–07

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