nep-net New Economics Papers
on Network Economics
Issue of 2008‒12‒07
nine papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Collaboration networks as carriers of knowledge spillovers: Evidence from EU27 regions By Jarno Hoekman; Koen Frenken; Frank van Oort
  2. Margin Squeeze in Fixed-Network Telephony Markets – competitive or anticompetitive? By Wolfgang Briglauer; Georg Götz; Anton Schwarz
  3. Diversity and network coherence as indicators of interdisciplinarity: Case studies in bionanoscience By Ismael Rafols; Martin Meyer
  4. Do we (still) need to regulate fixed network retail markets? By Wolfgang Briglauer; Georg Götz; Anton Schwarz
  5. Network embeddedness, specialization choices and performance in investment banking industry By Farina, Vincenzo
  6. Business Networks and inward FDI Policy By Fergal McCann
  7. Peer Effects and Social Networks in Education By Calvó-Armengol, Antoni; Patacchini, Eleonora; Zenou, Yves
  8. Banks’ centrality in corporate interlock networks: evidences in Italy By Farina, Vincenzo
  9. Compensation and Incentives in Medical Networks with Gate-keeping and Case Management By Schumacher, Petra

  1. By: Jarno Hoekman (Urban & Regional research centre Utrecht (URU), Utrecht University - The Netherlands); Koen Frenken (Urban & Regional research centre Utrecht (URU), Utrecht University - The Netherlands); Frank van Oort (Netherlands Institute for Spatial Research (RPB)- The Netherlands)
    Abstract: The geography of innovation traditionally concentrates on localised knowledge spillovers, yet neglects collaboration networks as a means to access knowledge outside the region. Using publication and patent data for 1316 regions in the EU27 plus Norway and Switzerland, we find that both localised knowledge spillovers and the knowledge spillovers stemming from collaboration affect the innovative performance of regions. The results provide support for EU policies aimed at creating European collaboration networks.
    Keywords: Knowledge Production Function, Spillovers, Collaboration, Networks, European Research Area, Publication, Patent, Public Good
    JEL: C21 O30 O33 O52 R11
    Date: 2008–09
  2. By: Wolfgang Briglauer (Austrian Regulatory Authority for Broadcasting and Telecommunications (RTR), Economics Division); Georg Götz (Justus-Liebig-University Gießen, Department of Economics); Anton Schwarz (Austrian Regulatory Authority for Broadcasting and Telecommunications (RTR), Economics Division)
    Abstract: This paper looks at the effects of different forms of wholesale and retail regulation on retail competition in fixed network telephony markets. We explicitly model two asymmetries between the incumbent operator and the entrant: (i) While the incumbent has zero marginal costs, the entrant has the wholesale access charge as (positive) marginal costs; (ii) While the incumbent is setting a two-part tariff at the retail level (fixed fee and calls price), the entrant can only set a linear price for calls. Competition from other infrastructures such as mobile telephony or cable is modelled as an ‘outside opportunity’ for consumers. We find that a horizontally differentiated entrant with market power may be subject to a margin squeeze due to double marginalization but will never be completely foreclosed. Entrants without market power might be subject to a margin squeeze if the wholesale access price is set at average costs and competitive pressure from other infrastructures increases. We argue that a wholesale price regulation at average costs is not optimal in such a situation and discuss retail minus and deregulation as potential alternatives.
    Keywords: access regulation, foreclosure, margin squeeze, telecommunications, fixed networks
    JEL: L12 L41 L42 L50 L96
    Date: 2008
  3. By: Ismael Rafols (SPRU, University of Sussex); Martin Meyer (SPRU, University of Sussex)
    Keywords: Interdisciplinary research, nanotechnology, nanoscience, diversity, indicators, network analysis
    JEL: C0 D8
    Date: 2008–01–02
  4. By: Wolfgang Briglauer (Austrian Regulatory Authority for Broadcasting and Telecommunications (RTR), Economics Division); Georg Götz (Justus-Liebig-University Gießen, Department of Economics); Anton Schwarz (Austrian Regulatory Authority for Broadcasting and Telecommunications (RTR), Economics Division)
    Abstract: In the beginning of fixed network liberalisation in Europe in the late 1990s, the main concern of regulators was to lower calls prices. This was done by introducing wholesale regulation and promoting service based competition. Some years later, the concern of some regulators turned from too high calls prices to too low calls prices which might ‘squeeze’ entrants out of the market. We look at a simple model in which this development is explained by increasing competitive pressure from an ‘outside opportunity’, e.g. mobile telephony. We conclude that a margin squeeze is not necessarily used by the incumbent as a device to drive competitors out of the market and increase market power but can also result from increased inter-model competition. If this is the case, we argue that regulators should consider alternatives to cost oriented access prices such as retail minus or complete deregulation.
    Keywords: access regulation, vertical integration, foreclosure, price squeeze, telecommunications, fixed networks
    JEL: L12 L41 L42 L50 L96
    Date: 2008
  5. By: Farina, Vincenzo
    Abstract: The idea that network structure and embeddedness affect firms’ competitive behavior and performance is not new both in network literature and in strategic management literature. This study recognizes that the possibility to fully exploit network opportunities is depending on firm specialization choices. By analyzing network embeddedness within the European investment banking industry, I find that banks enhance performance by having a central position in their network and that specialization reduces bank’s benefits of having a central position in the network.
    Keywords: Investment Banking; IPOs; Underwriting syndicates; Social network analysis.
    JEL: G24 M10
    Date: 2008
  6. By: Fergal McCann (University College Dublin)
    Abstract: I outline the effect of business networks on trade, FDI and wel- fare in a two-country, two-firm duopoly. The network effect, following Greaney (2002), is modelled as a marginal cost disadvantage facing a firm from Foreign in selling to Home. Unlike traditional trade costs, this cost cannot be avoided by investing in Home. My main addition is a Nash game between governments in which they subsidise the fixed costs of inward FDI. While the network effect is shown to lead to favourable outcomes for the Home firm, I show that once government subsidies to the fixed costs of FDI are included and welfare functions analysed, the network effect leads to asymmetric outcomes unfavourable to Home. This result can help inform the debate on countries' (in particular Japan's) international trade and investment relations.
    Keywords: Foreign Direct Investment, Network effects, Government Subsi- dies
    JEL: F12 F23 L52
    Date: 2008–04–25
  7. By: Calvó-Armengol, Antoni (Universitat Autònoma de Barcelona); Patacchini, Eleonora (University of Rome La Sapienza); Zenou, Yves (Stockholm University)
    Abstract: This paper studies whether structural properties of friendship networks affect individual outcomes in education. We first develop a model that shows that, at the Nash equilibrium, the outcome of each individual embedded in a network is proportional to her Katz-Bonacich centrality measure. This measure takes into account both direct and indirect friends of each individual but puts less weight to her distant friends. We then bring the model to the data by using a very detailed dataset of adolescent friendship networks. We show that, after controlling for observable individual characteristics and unobservable network specific factors, the individual's position in a network (as measured by her Katz-Bonacich centrality) is a key determinant of her level of activity. A standard deviation increase in the Katz-Bonacich centrality increases the pupil school performance by more than 7 percent of one standard deviation.
    Keywords: centrality measure, peer influence, network structure, school performance
    JEL: A14 C31 C72 I21
    Date: 2008–11
  8. By: Farina, Vincenzo
    Abstract: The idea that the governance mechanisms affect firms’ performance is well acknowledged in management literature. The settings prevailing in governance studies explain board’s roles at the light of the agency theory framework. However, a complementary perspective is focused on the acquisition of critical resources closely related to activation of external relations with the most influential actors of firm’s environment. One such kind of external relationship is called interlocking directorates and occur when an individual simultaneously sits on the board of two companies. Moreover, since banks control financial capital, that is a resource that has a universal value for all firms, they are more likely to be very important actors inside corporate networks. By analyzing interlocking directorates among listed banks and non financial firms in Italy, using the methods and theory of social network analysis (SNA), I find that banks are the most influential actors in the network and that centrality in the network enhances financial performance.
    Keywords: Corporate Governance; Board of Directors; Performance; Social network analysis.
    JEL: L20 G34
    Date: 2008
  9. By: Schumacher, Petra
    Abstract: New approaches in health care, such as e.g. Integrated Delivery Systems, affect the role and tasks of medical suppliers. More and more, medical suppliers are incorporated into the process of guiding patients to medical specialists and hospitals and thus managing the course of disease. In this context, the role of medical gate-keepers and case managers may provide opportunities for undesirable behavior (from the network's point of view). Therefore, compensation-induced incentives for gatekeepers and case managers are in the main focus of the paper. Different health care payment systems and the impact of financial and non-financial incentives on case managers and gate-keepers in medical networks are analyzed. Another focus is laid on medical suppliers that are not involved in managing diseases and guiding patients. Due to their smaller margin of actions and possibilities to take advantage of it, reimbursement should emphasize different aspects than for case managers.
    Keywords: networks; compensation; gate-keeping; case management
    JEL: I11 J33 L22
    Date: 2008–12–01

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