nep-net New Economics Papers
on Network Economics
Issue of 2009‒03‒14
five papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Coalition formation in the Airport Problem By Mahmoud Farrokhi
  2. Toc ’n’ Roll: Bargaining, Service Quality and Specificity in the UK Railway Network By Gianni De Fraja; Emanuela Michetti; Piercarlo Zanchettin
  3. What is the “value” of value-at-risk in a simulated portfolio decision-making game? By Steinbacher, Matjaz
  4. The World Trade Network By Luca De Benedictis; Lucia Tajoli
  5. Group Selection: The quest for social preferences By Salomonsson, Marcus

  1. By: Mahmoud Farrokhi (Institute of Mathematical Economics, Bielefeld University)
    Abstract: We have studied the incentives of forming coalitions in the Airport Problem. It has shown that in this class of games, if coalitions form freely, the Shapley value does not lead to the formation of grand or coalitions with many players. Just a coalition with a few number of players forms to act as the producer and other players would be the consumers of the product. We have found the two member coalition which forms and we have checked its stability.
    Date: 2009–03
  2. By: Gianni De Fraja; Emanuela Michetti; Piercarlo Zanchettin
    Abstract: The paper studies the regulatory design in an industry where the regulated downstream provider of services to final consumers purchases the necessary inputs from an upstream supplier. The model is closely inspired by the UK regulatory mechanism for the railway network. Its philosophy is one of vertical separation between ownership and operation of the rolling stock: the Train Operating Company (TOC) leases from a ROlling Stock COmpany (ROSCO) the trains it uses in its franchise. This, we show, increases the flexibility and competitiveness of the network. On the other hand, it also reduces the specificity of the rolling stock, thus increasing the cost of running the service, and the TOC’s incentive to exert quality enhancing effort, thus reducing the utility of the final users. Our simple model shows that the UK regime of separation may in fact be preferable from a welfare viewpoint.
    Keywords: Network regulation; Railways; Incomplete contracts; Relation specific investment
    JEL: D2 L1 L5 L92
    Date: 2009–02
  3. By: Steinbacher, Matjaz
    Abstract: In the paper, I simulate the social network games of a portfolio selection where agents consider VaR when managing their portfolios. Such agents behave quite differently from the agents considering only the expected returns of the alternatives that are available to them in time. The level of omniscience of agents and the presence of liquidity agents are demonstrated to be significant factors for the portfolio management.
    Keywords: social networks; portfolio decision-making; stochastic finance; Value-at-Risk
    JEL: G11 G32 Z13 C73
    Date: 2009
  4. By: Luca De Benedictis (University of Macerata); Lucia Tajoli (Politecnico di Milano)
    Abstract: <p><p> </p></p><p align="left">This paper uses the tools of network analysis and graph theory</p><p align="left">to graphically and analytically represent the characteristics of world</p><p align="left">trade. The structure of the World Trade Network is compared over</p><p align="left">time, detecting and interpreting patterns of trade ties among countries.</p><p align="left">In particular, we assess whether the entrance of a number of</p><p align="left">new important players into the world trading system in recent years</p><p align="left">has changed the main characteristics of the existing structure of world</p><p align="left">trade, or whether the existing network was simply extended to a new</p><p align="left">group of countries. We also analyze whether the observed changes in</p><p align="left">international trade flow patterns are related to the multilateral or the</p><p align="left">regional liberalization policies. The results show that trade integration</p><p align="left">at the world level has been increasing but it is still far from being</p><p align="left">complete, with the exception of some areas, that there is a strong</p><p align="left">heterogeneity in the countries’ choice of partners, and that the WTO</p><p align="left">plays an important role in trade integration. The role of the extensive</p><p align="left">and the intensive margin of trade is also highlighted.</p>
    Keywords: Network analysis,International Trade,WTO,Extensive and Intensive Margins of Trade,Gravity
    JEL: O1 O11
    Date: 2009–03
  5. By: Salomonsson, Marcus (Dept. of Economics, Stockholm School of Economics)
    Abstract: This paper surveys the literature on group selection. I describe the early contributions and the group selection controversy. I also describe the main approaches to group selection in the recent literature; fixation, assortative group formation, and reproductive externalities.
    Keywords: Altruism; spite; externalities; conformity; fixation; signalling
    JEL: C70 D62 D64
    Date: 2009–03–06

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