nep-net New Economics Papers
on Network Economics
Issue of 2009‒11‒07
seven papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. A Dynamic Game of Airline Network Competition: Hub-and-Spoke Networks and Entry Deterrence By Victor Aguirregabiria; Chun-Yu Ho
  2. Liberalisation in a world of second best: evidence on European network industries By Ugur, Mehmet
  3. Competition between TV Platforms By Laia Domènech Campmajó
  4. How exactly do networking Investments pay off? Analyzing the impact of nascent Entrepreneurs networking Investments on Access to Start-Up Resources By Semrau, Thorsten; Werner, Arndt
  5. Strategies in Social Network Formation By Anna Conte; Daniela Di Cagno; Emanuela Sciubba
  6. Efficient coalition formation and stable coalition structures in a supply chain environment By Popp, Alexandru W. A.
  7. Enhancing Trade Through Migration. A Gravity Model of the Network Effect. By Laura Casi.

  1. By: Victor Aguirregabiria; Chun-Yu Ho
    Abstract: In a hub-and-spoke network, the total profit function of an airline is supermodular with respect to its entry decisions at different city-pairs. This source of complementarity implies that a hub-and-spoke network can be an effective strategy to deter entry of competitors. This paper presents a dynamic game of airlines network competition that incorporates this entry deterrence motive for using hub-and-spoke networks. We summarize the results of the estimation of the model, with particular attention to empirical evidence on the entry deterrence motive.
    Keywords: Airline networks; Hub-and-spoke; Entry deterrence; Dynamic games; Supermodularity
    JEL: C73 L13 L41 L93
    Date: 2009–10–28
  2. By: Ugur, Mehmet
    Abstract: This article reports mixed results about the impacts of liberalisation in European network industries. Telecommunications prices have fallen and converged across EU-15, but electricity and gas prices have either increased or diverged. Productivity has increased, but mainly as a result of falling employment in absolute and relative terms. Liberalised industries are still characterised by high levels of market concentration and low levels of transparency and market integration. These findings are in line with the predictions of the theory of second best and suggest that the case for liberalisation of network industries has been oversold.
    Keywords: Liberalisation; network industries; second-best; public policy; European Union
    JEL: D02 D78 D24 D4
    Date: 2009–02–27
  3. By: Laia Domènech Campmajó (PPRE-IREA, University of Barcelona, Spain)
    Abstract: The aim of this paper is to identify the factors that affect the market penetration of pay television by studying the competition that exists between three types of technology (satellite, cable and ADSL). We distinguish three groups of factors: the level of market competition, the level of competition in the industry and the quality of the product being offered. Our results seem to indicate that as market concentration increases, the television service can achieve greater penetration. This relationship is specifically captured by the level of intra- and inter-platform competition. We also examine the relationship between free television channels and pay television and find that as the amount of time dedicated to the broadcasting of advertising by the former increases, the number of subscribers to pay TV rises. Finally, we examine product quality by introducing the effect of holding the rights to broadcast Professional Football League matches and an HBO or Showtime produced series. Our results suggest that these variables are critical for the penetration of pay television.
    Keywords: pay TV, competition between platforms, telecommunications.
    JEL: L82 L96
    Date: 2009–10
  4. By: Semrau, Thorsten; Werner, Arndt
    Abstract: It is widely recognized that networks provide access to the resources necessary for founding a business. Up until now, however, the relationship between networking investments and the availability of resources has not been analyzed in depth. Using a sample of 416 nascent entrepreneurs, we address this issue, and provide evidence that networking investments lead to diminishing marginal resource returns in terms of financial, informational, emotional and contact support. Our results also show that resource returns strongly vary with resource type. While emotional support is quite easy to get, many more networking investments are needed to achieve financial support.
    Keywords: Networks; Networking Investments; Resource Access; Nascent Entrepreneurship
    JEL: D23 L26 J24 D85 M13
    Date: 2009–06–01
  5. By: Anna Conte; Daniela Di Cagno; Emanuela Sciubba (School of Economics, Mathematics & Statistics, Birkbeck)
    Abstract: We run a computerised experiment of network formation where all connections are beneficial and only direct links are costly. Players simultaneously submit link proposals; a connection is made only when both players involved agree. We use both simulated and experimentally generated data to test the determinants of individual behaviour in network formation. We find that approximately 40% of the network formation strategies adopted by the experimental subjects can be accounted for as best responses. We test whether subjects follow alternative patterns of behaviour and in particular if they: propose links to those from whom they have received link proposals in the previous round; propose links to those who have the largest number of direct connections. We find that together with best response behaviour, these strategies explain approximately 75% of the observed choices. We estimate individual propensities to adopt each of these strategies, controlling for group effects. Finally we estimate a mixture model to highlight the proportion of each type of decision maker in the population.
    Date: 2009–06
  6. By: Popp, Alexandru W. A.
    Abstract: We study a real supply chain environment from which specific information and knowledge can be extrapolated for other similar environments. We focus our research on the analysis of the interactions between members forming different teams (and between the teams themselves), and on the leader’s management of the supply chain. We note that there are many elements that contribute to the profitability of the network, which is dependent on the actions of the actors involved. We analyze certain characteristics that the actors have, such as their behavior, adaptation and learning levels, effort and willingness. Based on these components, we examine the performance of our actors and of the teams that the actors form. We provide specific calculations that take into account most of the components determining the added value to the system. One of the advantages of our main formula is that it can be used to monitor the progress of the actors, as well as it can help in the identification of problematic aspects impeding in the creation of value for the system. Our formula is very flexible and a modeler is able to adapt it to similar environments, providing him with great insight in the structures that he investigates. We study certain theoretical games from which we uncover certain information and characteristics of similar environments and settings. Moreover, we provide a real life example in order to truly understand the mechanism of the network, and validate our theoretical assessments. Moreover, we provide certain recommendations for a leader that is responsible for the supervision of actors (which have specific responsibilities) and the administration of a supply chain environment.
    Keywords: coalition; supply chain management; core; value of the game; Coalition Factor Estimation
    JEL: M12 D23 M11 B40 C71 C44 D74 J21 L23 C72
    Date: 2009–10–27
  7. By: Laura Casi.
    Abstract: While trade liberalization has always been the core of common policies, only in very recent years Europe has started to address the challenge of migration in a comprehensive way. Conventional wisdom considers potential gains from liberalizing trade much higher for European countries than the benefits deriving from liberalization of migration. This paper gives evidence of the benefits European host countries had from immigration, identifying trade channel as the key driver of these benefits. It focuses on 17 European Union member states and 10 extra-European partners with the highest immigration flows towards the EU-27. The period considered is the decade 1997-2006. Controlling for endogeneity, the results I obtain suggest that migration have a statistically significant and robust enhancing effect on European countries exports, this effect being particularly important when considering differentiated commodities rather than homogeneous goods. This confirms the importance of the “network effect” of migration for European countries. Evidence on imports, instead, is puzzled. To my knowledge this is the first attempt in the literature to test the trade enhancing effect of migration using a panel, including a consistent number of European Countries and extra-European partner quite different in terms of geographical location, socio-economics and cultural characteristics and inspecting such recent years. This further extends existing evidence on the network effect and allows considering the results valid in a cross-country analysis over time.
    Keywords: International Migration, Economic Integration, Networks, Europe.
    JEL: F15 F22
    Date: 2009–10

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