nep-net New Economics Papers
on Network Economics
Issue of 2009‒01‒17
six papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Can open sourcing lead to inferior standards? By Kristian Koerselman
  2. Peer Effects and Social Networks in Education By Antoni Calvó-Armengol; Eleonora Patacchini; Yves Zenou
  3. Bridges in social capital: A review of the definitions and the social capital of social capital researchers By Akcomak, Semih
  4. Recommender Systems and their Effects on Consumers: The Fragmentation Debate By Daniel Fleder; Kartik Hosanagar
  5. The momentum for network separation: a guide for regulators By Ricardo Gonçalves; Álvaro Nascimento
  6. The Spread of the Credit Crisis: View from a Stock Correlation Network By Smith, Reginald

  1. By: Kristian Koerselman (Department of Economics and Statistics, bo Akademi University)
    Abstract: I investigate the effect of open source on standardization outcomes in a market with positive network externalities. In a closed source world, it seems reasonable to assume that the probability of a standard being chosen is positively correlated with its quality. Open source may weaken or invert this relationship by giving Bertrand competition losers a second chance. It however follows that though open source leads to more competition and more standardization, the chosen standard will be the same as when open source is not an option.
    Keywords: open source software, FLOSS, standardization, network externalities, competition
    JEL: H41 L12 L86 L96
    Date: 2008–01
  2. By: Antoni Calvó-Armengol; Eleonora Patacchini; Yves Zenou (Universitat Autònoma de Barcelona,Università di Roma “La Sapienza”, Stockholm University, IFN, GAINS, and CREAM)
    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.
    Date: 2008–11
  3. By: Akcomak, Semih (UNU-MERIT, and Maastricht University)
    Abstract: There has been a recent surge of interest in social economics and social capital. Articles on social capital that are published in the last five years constitute more than 60 percent of all articles on social capital. Research on social capital is now massive and spans sociology, economics, management, political science and health sciences. Despite this interest there is still not a consensus on the definition and the measurement of social capital. This paper argues that this is due to lack of interaction between disciplines. The social capital of social capital researchers is low between disciplines. Different from other theories of capital, social capital theory has concurrently been developed by various disciplines and as such, advancements in social capital research could only be achieved by conducting cross-disciplinary research.
    Keywords: Capital, social capital, co-authorship network, network analysis, diffusion processes
    JEL: A13 D85 O33 Z13
    Date: 2009
  4. By: Daniel Fleder (Department of Operations and Information Management, The Wharton School); Kartik Hosanagar (Department of Operations and Information Management, The Wharton School)
    Abstract: Recommender systems survey many products to help consumers find which books, music, movies, and news stories best match their interests. This ability to focus more powerfully on one's interests has spawned criticism that recommenders will fragment consumers. Critics say recommenders cause consumers to have less in common and that the media should do more to increase exposure to a variety of content. Others, however, contend that recommenders do the opposite: they may homogenize users because they push users toward the same items and share information among those who would otherwise not communicate. These are opposing views, discussed in the literature for over ten years, for which there is not yet empirical evidence. We present an empirical study of recommender systems in the music industry. In contrast to concerns that users are becoming more fragmented, we find that users become more similar to one another in their purchases. This increase in similarity occurs for two reasons, which we term a taste and volume effect. The taste effect is that consumers buy a more similar assortment of products after recommendations. The volume effect is that consumers have more in common because they simply purchase more after recommendations, increasing the chance of having common purchases with others. When we view consumers as a similarity network before versus after recommendations, we find that the network becomes smaller and denser. These findings suggest that, for this setting, critiques of fragmentation may be misplaced.
    Keywords: recommender systems, collaborative filtering, fragmentation, personalization, long tail
    JEL: O3
    Date: 2008–12
  5. By: Ricardo Gonçalves (Faculdade de Economia e Gestão - Universidade Católica Portuguesa (Porto)); Álvaro Nascimento (Faculdade de Economia e Gestão - Universidade Católica Portuguesa (Porto))
    Abstract: NGAs (Next Generation Access Networks) are a challenge to regulators and operators insofar as they require large investments, there is significant uncertainty about the ability to recover costs, and the choice of the appropriate regulatory regime is far from consensual. Regulatory authorities might want to seize the moment and reconsider the mandatory vertical separation of telecommunication firms, without jeopardizing incentives to innovation, investment and welfare. We provide a provocative but simple test for the adequacy of network separation as a regulatory remedy. We propose a decision tree procedure with four steps in order to assess whether network separation is an adequate regulatory response: [1] “Is there significant market power in the market for the provision of access services under NGAs?”; [2] “Are there few vertical complementarities between services along the supply chain?”; [3] “Is functional separation a better regulatory tool than any other alternative?”; and [4] “Is structural separation superior to functional separation?”. A positive answer to the first three questions implies that the regulator should consider functional network separation, whilst the fourth is needed for the structural alternative.
    Keywords: Telecommunications networks, Functional separation, Structural separation
    JEL: L51 L96
    Date: 2009–01
  6. By: Smith, Reginald
    Abstract: The credit crisis roiling the world's financial markets will likely take years and entire careers to fully understand and analyze. A short empirical investigation of the current trends, however, demonstrates that the losses in certain markets, in this case the US equity markets, follow a cascade or epidemic flow like model along the correlations of various stocks. A few images and explanation here will suffice to show the phenomenon. Also, whether the idea of "epidemic" or a "cascade" is a metaphor or model for this crisis will be discussed. Animations of the spread of the crisis are available at editcrisis
    Keywords: networks; econophysics; equities; stock market; correlation; credit crisis
    JEL: G15 G10
    Date: 2008–11–11

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