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on Network Economics |
| By: | Hanna Halaburda (Harvard Business School, Strategy Unit); Mikolaj Jan Piskorski (Harvard Business School, Strategy Unit) |
| Abstract: | We model conditions under which agents in two-sided matching markets would rationally prefer a platform limiting choice. We show that platforms that offer a limited set of matching candidates are attractive by reducing the competition among agents on the same side of the market. An agent who sees fewer candidates knows that these candidates also see fewer potential matches, and so are more likely to accept the match. As agents on both sides have access to more candidates, initially positive indirect network effects decrease in strength, reach their limit and eventually turn negative. The limit to network effects is different for different types of agents. For agents with low outside option the limit to network effects is reached relatively quickly, and those agents choose the platform with restricted number of candidates. This is because those agents value the higher rate of acceptance more than access to more candidates. Agents with higher outside option choose the market with larger number of candidates. The model helps explain why platforms offering restricted number of candidates coexist alongside those offering larger number of candidates, even though the existing literature on network effects suggests that the latter should always dominate the former. |
| Keywords: | matching platform, indirect network effects, limits to network effects |
| JEL: | C7 D8 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:10-098&r=net |
| By: | Bradley J. Ruffle (Ben-Gurion University); Avi Weiss (Bar-Ilan University); Amir Etziony (Hewlett-Packard Israel) |
| Abstract: | A network market is a market in which the benefit each consumer derives from a good is an increasing function of the number of consumers who own the same or similar goods. A major obstacle that plagues the introduction of a network good is the ability to reach critical mass, namely, the minimum number of buyers required to render purchase worthwhile. This can be likened to a coordination game with multiple Pareto-ranked equilibria. We introduce an experimental paradigm to study consumers' ability to coordinate on purchasing the network good. Our results highlight the central importance of the level of the critical mass. |
| Keywords: | Experimental economics, network goods, coordination game, critical mass |
| JEL: | C92 L19 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:biu:wpaper:2010-03&r=net |
| By: | Alireza Abbasi; Jorn Altmann (Technology Management, Economics and Policy Program (TEMEP), Seoul National University) |
| Abstract: | Social networks play an increasingly important role in knowledge management, information retrieval, and collaboration. In order to leverage the full potential of social networks, social networks need to be supported through technical systems. Within this paper, we introduce such a technical system. It is called AcaSoNet. It is a system for identifying and managing social networks of researchers. In particular, AcaSoNet employs a combination of techniques to extract co-author relationships between researchers and to detect groups of persons with similar interest. Past systems have used either search engines to extract information about social networks from the Web (Web mining) or have required people¡¯s effort to enter their relationships to others into the system (as being done by most social network services). AcaSoNet, instead, uses a combination of these two types, thereby achieving data reliability and scalability. It extracts and collects data of researchers from the Web but allows researchers to modify the data. In the current version, our system can identify the social network based on publication lists and evaluate the publication activities of users within an academic community. |
| Keywords: | Social network systems, academic community, co-author relationship, publication analysis, productivity analysis, knowledge sharing, knowledge transfer, Web mining, performance analysis, and social network analysis. |
| JEL: | C43 C88 D83 L86 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:snv:dp2009:201058&r=net |
| By: | Choi, S.; Lee, J. |
| Abstract: | We study experimentally how the network structure and length of pre-play communication affect behavior and outcome in a multi-player coordination game with conflicting preferences. Network structure matters but the interaction between network and time effects is more subtle. Under each time treatment, substantial variations are observed in both the rate of coordination and distribution of coordinated outcomes across networks. But, increasing the communication length improves both efficiency and equity of coordination. In all treatments, coordination is mostly explained by convergence in communication. We also identify behaviors that explain variations in the distribution of coordinated outcomes both within and across networks. |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:ner:ucllon:http://eprints.ucl.ac.uk/18895/&r=net |
| By: | Bourreau, Marc (Institut Telecom and CREST-LEI); Dogan, Pinar (Harvard U) |
| Abstract: | In this paper, we consider an unregulated incumbent who owns a broadband infrastructure and decides on how much access to provide to a potential entrant. The level of access, i.e., the network elements that are shared in the provision of competing broadband services, not only determines the amount of investment the entrant needs to undertake to enter the market, but also the intensity of post-entry competition. We consider an access scheme that determines an access level and an associated two-part tariff. We show that the equilibrium level of access is higher when the sensitivity of product differentiation to the level of access is lower, and when the marginal investment cost is higher. We also show that the unregulated incumbent sets a suboptimally low (high) level of access if the degree of service differentiation is sufficiently high (low). |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp10-006&r=net |
| By: | Herings P. Jean-Jacques; Mauleon Ana; Vannetelbosch Vincent (METEOR) |
| Abstract: | A set of coalition structures P is farsightedly stable (i) if all possible deviations from any coalition structure p belonging to P to a coalition structure outside P are deterred by the threat of ending worse off or equally well off, (ii) if there exists a farsighted improving path from any coalition structure outside the set leading to some coalition structure in the set, and (iii) if there is no proper subset of P satisfying the first two conditions. A non-empty farsightedly stable set always exists. We provide a characterization of unique farsightedly stable sets of coalition structures and we study the relationship between farsighted stability and other concepts such as the largest consistent set and the von Neumann-Morgenstern farsightedly stable set. Finally, we illustrate our results by means of coalition formation games with positive spillovers. |
| Keywords: | microeconomics ; |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2010025&r=net |
| By: | Yann Bramoullé; Rachel Kranton; Martin D'Amours |
| Abstract: | This paper brings a general network analysis to a wide class of economic games. A network, or interaction matrix, tells who directly interacts with whom. A major challenge is determining how network structure shapes overall outcomes. We have a striking result. Equilibrium conditions depend on a single number: the lowest eigenvalue of a network matrix. Combining tools from potential games, optimization, and spectral graph theory, we study games with linear best replies and characterize the Nash and stable equilibria for any graph and for any impact of players’ actions. When the graph is sufficiently absorptive (as measured by this eigenvalue), there is a unique equilibrium. When it is less absorptive, stable equilibria always involve extreme play where some agents take no actions at all. This paper is the first to show the importance of this measure to social and economic outcomes, and we relate it to different network link patterns. |
| Keywords: | Networks, potential games, lowest eigenvalue, stable equilibria, asymmetric equilibria |
| JEL: | C72 D00 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:1018&r=net |
| By: | Roldan, Flavia (IESE Business School) |
| Abstract: | This paper studies how the presence of an antitrust authority affects market-sharing agreements made by firms. These agreements prevent firms from entering each other's market. The set of these agreements defines a collusive network, which is pursued by antitrust authorities. This article shows that while in the absence of the antitrust authority, a network is stable if its alliances are large enough when considering the antitrust authority, and more competitive structures can be sustained through bilateral agreements. Antitrust laws may have a pro-competitive effect, as they give firms in large alliances more incentives to cut their agreements at once. |
| Keywords: | market-sharing; economic networks; antitrust authorit; oligopoly; |
| JEL: | D43 K21 L41 |
| Date: | 2010–04–07 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0854&r=net |
| By: | Elke Holst; Andrea Schäfer; Mechthild Schrooten |
| Abstract: | Remittances from Germany are substantial. Cross-border transfers to family and friendship networks outside Germany are not only made by foreigners. Many naturalized migrants send money home as well. Here, we focus on international networks and gender-specific determinants of remittances from the senders' perspective, based on data from the German Socio-Economic Panel Study (SOEP) for the years 2001-2006. Our findings show, above all, that foreign women remit less money than foreign men. Using information on the social network in the home country we find, first, that the social network abroad explains part of gender differences in remittance behavior. Second, employing gender interaction terms for the social network effects suggests that remittance behavior is affected by traditional gender roles. Third, the migrant's social integration in the destination country matters. Remittance decisions of naturalized migrants do not show the aforementioned gender effect. |
| Keywords: | Remittances, Gender, Foreigners, Naturalized Migrants |
| JEL: | F24 J16 D13 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1005&r=net |