nep-net New Economics Papers
on Network Economics
Issue of 2009‒11‒14
thirteen papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Competition in two-sided markets with common network externalities By Bardey, David; Cremer, Helmuth; Lozachmeur, Jean-Marie
  2. The Structural Evolution of the Web2.0 Service Network By Junseok Hwang; Jorn Altmann; Kibae Kim
  3. Encouraging Cooperation in Ad-hoc Mobile-Phone Mesh Networks for Rural Connectivity By Kavitha Ranganathan; Vikramaditya Shekhar
  4. On Revenue and Welfare Dominance of Ad Valorem Taxes in Two-Sided Markets By Kind, Hans Jarle; Koethenbuerger, Marko; Schjelderup, Guttorm
  5. Evaluating Scholars Based on Their Academic Collaboration Activities:The RC-Index and CC-Index for Quantifying Collaboration Activities of Researchers and Scientific Communities By Alireza Abbasi; Jorn Altmann; Junseok Hwang
  6. Platform competition, compatibility, and social efficiency By Casadesus-Masanell, Ramon; Ruiz-Aliseda, Francisco
  7. A Contest Model of a Professional Sports League with Two-Sided Markets By Helmut Dietl; Tobias Duschl; Egon Franck; Markus Lang
  8. Evaluating Downside Risks in Reliable Networks By Megha Sharma; Diptesh Ghosh
  9. Extended Family Networks in Rural Mexico: A Descriptive Analysis By Angelucci, Manuela; De Giorgi, Giacomo; Rangel, Marcos A.; Rasul, Imran
  10. Family Networks and School Enrolment: Evidence from a Randomized Social Experiment By Angelucci, Manuela; De Giorgi, Giacomo; Rangel, Marcos A.; Rasul, Imran
  11. Foreclosing competition through access charges and price discrimination By Lopez, Angel L.; Rey, Patrick
  12. Social Networking: Changing the way we communicate and do business. By Jones, Kevin
  13. Coalitional Equilibria of Strategic Games By Rida Laraki

  1. By: Bardey, David (University of Rosario, Bogota); Cremer, Helmuth (TSE (GREMAQ-CNRS)); Lozachmeur, Jean-Marie (TSE (GREMAQ-CNRS))
    Date: 2009–10
  2. By: Junseok Hwang; Jorn Altmann; Kibae Kim (Technology Management, Economics and Policy Program(TEMEP), Seoul National University)
    Abstract: Purpose- The purpose of this research is to analyze empirically the structure of the Web2.0 service network and the mechanism behind its evolution over time. Design/Methodology/Approach - Based on the list of Web2.0 services and their Mashups that is announced on, a network of Web2.0 services was constructed. Within this network, a node represents a Web2.0 service with an open API, and a link between two nodes represents the existence of a Mashup service that uses the two nodes.Findings - Our findings suggest that the evolution of the Web2.0 service network follows the preferential attachment rule, although the exponent of the preferential attachment is lower than for other networks following a preferential attachment rule. Additionally, our results indicate that the Web2.0 service network evolves to a scalefree network, but the exponent of the power law distribution is lower than for other networks as well. Originality/ value - The research applied social network analysis to the Web2.0 service network. It showed that its network structure and the evolution mechanism are different from those found in similar areas, e.g. the WWW. The findings imply that there are factors which lower the exponent of the preferential attachment equation and the power law distribution of the degree centralities. Research limitation/implications - However, we did not investigate the factors responsible for the low values of the exponent of the preferential attachment equation and the exponent of the power law distribution. However, we discussed that it could be correlated with the fact that the interconnection between nodes depends on the property of the nodes.
    Keywords: Software Services Economics, Web2.0 Mashup, Scale-Free Network, Preferential Attachment Rule, Self-Organization, Social Network Analysis
    JEL: L16 O11 O47
    Date: 2009–09
  3. By: Kavitha Ranganathan; Vikramaditya Shekhar
    Abstract: This paper proposes a rating based scheme for encouraging user participation in ad-hoc mobile phone mesh networks. These networks are particularly attractive for remote/rural areas in developing countries as they do not depend on costly infrastructure and telecom operators. We evaluate our scheme using extensive simulations and find that our proposed scheme is successful in enhancing the network throughput.
    Date: 2009–09–09
  4. By: Kind, Hans Jarle (Dept. of Economics, Norwegian School of Economics and Business Administration); Koethenbuerger, Marko (Department of Economics, University of Copenhagen); Schjelderup, Guttorm (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: A benchmark result in public economics is that it is possible to increase both tax revenue and welfare by making a monopoly subject to ad valorem taxes rather than unit taxes. We show that such revenue and welfare dominance does not hold in two-sided markets.
    Keywords: Ad Valorem Taxes; Unit Taxes; Two-Sided Markets; Revenue-Dominance; Welfare-Dominance; Monopoly
    JEL: D40 H20 L10
    Date: 2009–09–15
  5. By: Alireza Abbasi; Jorn Altmann; Junseok Hwang (Technology Management, Economics and Policy Program(TEMEP), Seoul National University)
    Abstract: Although there are many studies for quantifying the academic performance of researchers, such as measuring the scientific performance based on the number of publications, there are no studies about quantifying the collaboration activities of researchers. This study addresses this shortcoming by examining the collaboration network structure of researchers, the number of collaborations with other researchers, and the productivity index of co-authors. Based on the measures, two new indices, the RC-Index and CC-Index, are proposed for quantifying the collaboration activities of researchers and scientific communities. After applying these indices on a data set generated from publication list of five schools of information systems, we discuss the usefulness of these indices.
    Date: 2009–09
  6. By: Casadesus-Masanell, Ramon (Harvard Business Scholl); Ruiz-Aliseda, Francisco (Universitat Pompeu Fabra)
    Abstract: Katz and Shapiro (1985) study systems compatibility in settings with one-sided platforms and direct network externalities. We consider systems compatibility in settings with two-sided platforms and indirect network externalities to develop an explanation why markets with two-sided platforms are often characterized by incompatibility with one dominant player who may subsidize access to one side of the market. We find that incompatibility gives rise to asymmetric equilibria with a dominant platform that earns more than under compatibility. We also find that incompatibility generates larger total welfare than compatibility when horizontal differences between platforms are small.
    Keywords: network; industries; platforms; markets;
    Date: 2009–06–17
  7. By: Helmut Dietl (Institute for Strategy and Business Economics, University of Zurich); Tobias Duschl (Institute for Strategy and Business Economics, University of Zurich); Egon Franck (Institute for Strategy and Business Economics, University of Zurich); Markus Lang (Institute for Strategy and Business Economics, University of Zurich)
    Abstract: This paper develops a model of a professional sports league with network externalities by integrating the theory of two-sided markets into a contest model. In professional team sports, leagues function as a platform that enables sponsors to interact with fans. In these league-mediated interactions, positive network effects operate from the fan market to the sponsor market, while negative network effects operate from the sponsor market to the fan market. Clubs react to these network effects by charging higher (lower) prices to sponsors (fans). Our analysis shows that the size of these network effects determines the level of competitive balance within the league. Traditional models, which do not take network externalities into account, under- or overestimate the actual level of competitive balance, which may lead to wrong policy decisions. Moreover, we show that clubs benefit from stronger combined network effects through higher profits. Finally, we derive policy recommendations for improving competitive balance by taking advantage of network externalities.
    Keywords: Competitive balance, contest, multisided market, network externalities, team sports league
    JEL: L11 L13 L83 M21
    Date: 2009–11
  8. By: Megha Sharma; Diptesh Ghosh
    Abstract: Reliable networks are those in which network elements have a positive probability of failing. Conventional performance measures for such networks concern themselves either with expected network performance or with the performance of the network when it is performing well. In reliable networks modeling critical functions, decision makers are often more concerned with network performance when the network is not performing well. In this paper, we study the single-source single-destination maximum flow problem through reliable networks and propose two risk measures to evaluate such downside performance. We propose an algorithm called COMPUTE-RISK to compute downside risk measures, and report our computational experience with the proposed algorithm
    Date: 2009–10–01
  9. By: Angelucci, Manuela (University of Arizona); De Giorgi, Giacomo (Stanford University); Rangel, Marcos A. (Harris School, University of Chicago); Rasul, Imran (University College London)
    Abstract: We provide descriptive evidence on the characteristics of a household’s extended family network using data from the Progresa social assistance program in rural Mexico. We exploit information on the paternal and maternal surnames of household heads and their spouses and the patronymic naming convention to identify the inter and intra generational family links of each household to others in the village. This provides an almost complete mapping of extended family networks structures across 506 Mexican villages, covering 22,000 households and over 130,000 individuals. We then provide evidence on – (i) whether husbands and wives differ in the extent to which members of their extended family are located in geographic proximity; (ii) the characteristics that predict the existence of extended family links; (iii) the similarity of households within the same family network in terms of their poverty, and how this differs within and between generations of the extended family.
    Keywords: extended family network, Progresa
    JEL: J12 O12
    Date: 2009–10
  10. By: Angelucci, Manuela (University of Arizona); De Giorgi, Giacomo (Stanford University); Rangel, Marcos A. (Harris School, University of Chicago); Rasul, Imran (University College London)
    Abstract: We present evidence on whether and how a household's behavior is influenced by the presence and characteristics of its extended family. Using data from the PROGRESA program in Mexico, we exploit information on the paternal and maternal surnames of heads and spouses in conjunction with the Spanish naming convention to identify the inter and intra generational family links of each household to others in the same village. We then exploit the randomized research design of the PROGRESA evaluation data to identify whether the treatment effects of PROGRESA transfers on secondary school enrolment vary according to the characteristics of extended family. We find PROGRESA only raises secondary enrolment among households that are embedded in a family network. Eligible but isolated households do not respond. The mechanism through which the extended family influences household schooling choices is the redistribution of resources within the family network from eligibles that receive de facto unconditional cash transfers from PROGRESA, towards eligibles on the margin of enrolling children into secondary school.
    Keywords: extended family network, PROGRESA, resource sharing, schooling
    JEL: I21 J12 O12
    Date: 2009–10
  11. By: Lopez, Angel L. (IESE Business School); Rey, Patrick (Toulouse School of Economics)
    Abstract: This article analyzes competition between two asymmetric networks, an incumbent and a new entrant. Networks compete in non-linear tariffs and may charge different prices for on-net and off-net calls. Departing from cost-based access pricing allows the incumbent to foreclose the market in a profitable way. If the incumbent benefits from customer inertia, then it has an incentive to insist on the highest possible access markup even if access charges are reciprocal and even in the absence of actual switching costs. If instead the entrant benefits from customer activism, then foreclosure is profitable only when switching costs are large enough.
    Keywords: Networks; benefits; costs; customer;
    Date: 2009–07–09
  12. By: Jones, Kevin
    Abstract: This paper reviews the value of social networking and the impact it can have on small and large businesses. The paper also reviews the Social Networking Business Plan and the power of recommender networks. Examples are given of inbound and outbound marketing techniques. Social Networking is an integral part of inbound marketing. A synopsis of the evolving demographic of social networkers is presented to add clarity and show potential for social networking websites and tools.
    Keywords: social networking; business; Facebook; The Social Network Business Plan; Social Networking Strategy; social networking demographics; inbound marketing; outbound marketing; advertising in the 21st century
    JEL: D71 D83 Z13 M13
    Date: 2009–10–15
  13. By: Rida Laraki (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)
    Abstract: Let N be a set of players, C the set of permissible coalitions and G an N-playerstrategic game. A profile is a coalitional-equilibrium if no coalition permissible coalition in C has a unilateral deviation that profits to all its members. Nash-equilibria consider only single player coalitions and Aumann strong-equilibria permit all coalitions to deviate. A new fixed point theorem allows to obtain a condition for the existence of coalitional equilibria that covers Glicksberg for the existence of Nash-equilibria and is related to Ichiishi's condition for the existence of Aumann strong-equilibria.
    Keywords: Fixed point theorems, maximum of non-transitive preferences, Nash and strong equilibria, coalitional equilibria
    Date: 2009–11–02

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