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on Network Economics |
| By: | Yann Bramoullé; Bernard Fortin |
| Abstract: | In a social network, agents have their own reference group that may influence their behavior. In turn, the agents' attributes and their behavior affect the formation and the structure of the social network. We survey the econometric literature on both aspects of social networks and discuss the identification and estimation issues they raise. |
| Keywords: | Social network, peer effects, identification, network formation, pair-wise regressions, separability, mutual consent |
| JEL: | D85 L14 Z13 C3 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:0913&r=net |
| By: | Ballester, Coralio (University of Alicante); Calvó-Armengol, Antoni (Universitat Autònoma de Barcelona); Zenou, Yves (Stockholm University) |
| Abstract: | Delinquents are embedded in a network of relationships. Social ties among delinquents are modeled by means of a graph where delinquents compete for a booty and benefit from local interactions with their neighbors. Each delinquent decides in a non-cooperative way how much delinquency effort he will exert. Using the network model developed by Ballester et al. (2006), we characterize the Nash equilibrium and derive an optimal enforcement policy, called the key-player policy, which targets the delinquent who, once removed, leads to the highest aggregate delinquency reduction. We then extend our characterization of optimal single player network removal for delinquency reduction, the key player, to optimal group removal, the key group. We also characterize and derive a policy that targets links rather than players. Finally, we endogenize the network connecting delinquents by allowing players to join the labor market instead of committing delinquent offenses. The key-player policy turns out to be much more complex since it depends on wages and on the structure of the network. |
| Keywords: | social networks, delinquency decision, key group, NP-hard problem, crime policies |
| JEL: | A14 C72 K42 L14 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4122&r=net |
| By: | Schindler, Dirk (Universität Konstanz); Schjelderup, Guttorm (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration) |
| Abstract: | We investigate how multinational two-sided platform firms set their prices on intra firm transactions. Two-sided platform firms derive income from two customer groups that are connected through at least one positive network externality from one group to the other. A main finding is that even in the absence of taxation transfer prices deviate from marginal cost of production. A second result of the paper is that it is inherently difficult to establish arm's length prices in two-sided markets. Finally, we find that differences in national tax rates may be welfare enhancing despite the use of such prices as a profit shifting device. |
| Keywords: | Multinational enterprises; two-sided markets; profit shifting |
| JEL: | D21 L24 |
| Date: | 2009–04–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2009_001&r=net |
| By: | Roland Pongou (Brown University); Roberto Serrano (Brown University and IMDEA Social Sciences) |
| Abstract: | We study the dynamic stability of fidelity networks, which are networks that form in a mating economy of agents of two types (say men and women), where each agent desires direct links with opposite type agents, while engaging in multiple partnerships is considered an act of infidelity. Infidelity is punished more severely for women than for men. We consider two stochastic processes in which agents form and sever links over time based on the reward from doing so, but may also take non-beneficial actions with small probability. In the first process, an agent who invests more time in a relationship makes it stronger and harder to break by his/her partner; in the second, such an agent is perceived as weak. Under the first process, only egalitarian pairwise stable networks (in which all agents have the same number of partners) are visited in the long run, while under the second, only anti-egalitarian pairwise stable networks (in which all women are matched to a small number of men) are. Next, we apply these results to find that under the first process, HIV/AIDS is equally prevalent among men and women, while under the second, women bear a greater burden. The key message is that anti-female discrimination does not necessarily lead to higher HIV/AIDS prevalence among women in the short run, but it does in the long run. |
| Keywords: | fidelity networks; anti-female discrimination; stochastic stability; HIV/AIDS; union formation models |
| JEL: | A14 C7 I12 J00 |
| Date: | 2009–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:imd:wpaper:wp2009-03&r=net |
| By: | George Gardner (Reserve Bank of Australia); Andrew Stone (Reserve Bank of Australia) |
| Abstract: | This paper is the second of two companion pieces. In the first we developed a model of competition between payment systems which extends that of Chakravorti and Roson (2006). Here we turn to the results which can be obtained from the Chakravorti and Roson model, from our extension of it, and from a third family of models which we develop in this paper. We obtain two main sets of findings. First, we shed further light on how competing platforms will set their price level and pricing structure when endogenous multi-homing is allowed on both sides of the market. Our results challenge the general finding in the literature that the greater the propensity of one side of the market to single-home, the more attractive will be the pricing offered to its members by competing platforms. Our results confirm that while this finding generally holds when platforms charge both consumers and merchants on a purely per-transaction basis, it need not hold in the more realistic situation where platforms instead levy flat fees on consumers. Second, we extend findings of Hermalin and Katz (2006) showing that, in certain circumstances, platforms may offer less attractive pricing to the side of the market which holds the choice of payment instrument at the moment of sale. |
| Keywords: | payments policy; two-sided markets |
| JEL: | D43 E42 L13 L14 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:rba:rbardp:rdp2009-03&r=net |