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on Network Economics |
| By: | Martin Maegli; Christian Jaag; Matthias Finger |
| Abstract: | The various actors in the regulated industries relate to each other within a broader institutional framework, i.e., by way of formal and informal rules. An important role in the implementation of liberalization processes is given to regulation and thus to regulatory institutions. The rationale for regulation is its positive effect on society by correcting market failures. But regulatory intervention also causes costs which we call “costs of regulatory governance”. These costs result from negative consequences caused by regulatory requirements and from the implementation of regulatory instruments. These costs will depend upon the formal and informal rules among the involved actors, upon the allocation of property rights among these actors, as well as upon the various principal-agent or more generally contractual relationships among these actors. We distinguish between direct and indirect costs of regulation: Direct costs occur in relation with the institutional design of the regulatory framework and the behavior of actors. Indirect costs result from distortive incentives and finally turn out in an inefficient supply of goods and services. Using the example of the Swiss postal market we offer a first outline of a possible application of the framework. In this article we neither intend to quantify regulatory costs nor do we question regulation per se. We rather present a qualitative framework which helps to structure a discussion about regulatory challenges in network industries. |
| Keywords: | Governance costs, Network industries, Postal market |
| JEL: | L51 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:chc:wpaper:0018&r=net |
| By: | Yuki Kumagai (School of Economics, University of Nottingham) |
| Abstract: | The purpose of this paper is to explore strategic incentives to use trade networks rather than markets and shed light on the dynamic relation between the two distinct trading systems: a formal system of markets and a decentralised system of networks. We investigate the issues in the infinitely repeated multi-player prisoner's dilemma game with random matching. The existing literature emphasises the impor- tance of information transmission in sustaining long-run cooperation in repeated personal transactions under perfect observability. By con- trast, we show that a folk theorem may hold if we change the way traders are matched, without introducing any information sharing. We also examine different stages of the evolution of trading system. The study states conditions under which agents prefer to trade on networks rather than in markets. |
| Keywords: | Repeated trade; Moral hazard; Matching; Transaction costs; Networks; Institutions |
| JEL: | F10 C73 D02 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2010-07&r=net |
| By: | James Chapman; Yinan Zhang |
| Abstract: | In the Canadian large value payment system an important goal is to understand how liquidity is transferred through the system and hence how efficient the system is in settling payments. Understanding the structure of the underlying network of relationships between participants in the payment system is a crucial step in achieving the goal. The set of nodes in any given network can be partitioned into a number of groups (or "communities"). Usually, the partition is not directly observable and must be inferred from the observed data of interaction flows between all nodes. In this paper we use the statistical model of Copic, Jackson, and Kirman (2007) to estimate the most likely partition in the network of business relationships in the LVTS. Specifically, we estimate from the LVTS transactions data different "communities" formed by the direct participants in the system. Using various measures of transaction intensity, we uncover communities of participants that are based on both transaction amount and their physical locations. More importantly these communities were not easily discernible in previous studies of LVTS data since previous studies did not take into account the network (or transitive) aspects of the data. |
| Keywords: | Payment, clearing, and settlement systems; Financial stability |
| JEL: | C11 D85 G20 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:10-13&r=net |
| By: | Chi, Feng; Yang, Nathan |
| Abstract: | Our general objective is to characterize the recent and well publicized diffusion of Twitter among politicians in the United States 111th House of Representatives. Ultimately, Barrack Obama, Facebook and peers matter when it comes to the propensity and speed of Twitter adoption. A basic analysis of the distribution of first Tweets over time reveals clustering around the President's inauguration; which holds regardless whether the adopter is Democratic or Republican, or an incumbent or newcomer. After we characterize which representatives are most likely to adopt Twitter, we confirm the widespread belief that Facebook and Twitter are indeed complementary technology. Given their perceived desire for accessible government, a surprising result is that Republicans are more likely to adopt Twitter than Democrats. Finally, using the exact dates of each adopter's first Tweet, we demonstrate that the diffusion of Twitter is faster for those representatives with a larger number of peers already using the technology, where peers are defined by two social networks: (1) Politicians representing the same state; and (2) politicians belonging to the same committees; especially so for those in committee networks. This observed behavior can be rationalized by social learning, as the instances in which the peer effects are important correspond to the cases in which social learning is relevant. |
| Keywords: | Communication; diffusion of technology; political marketing; social interaction; social media; social learning. |
| JEL: | M3 D83 D85 |
| Date: | 2010–06–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:23225&r=net |
| By: | Britta Hoyer; Kris De Jaegher |
| Abstract: | Networks are one of the essential building blocks of society. Not only do firms cooperate in R&D networks, but firms themselves may be seen as networks of information-exchanging workers. Social movements increasingly make use of networks to exchange information, just as on the negative side criminal and terrorist networks use them. However, the literature on networks has mainly focused on the cooperative side of networks and has so far neglected the competition side of networks. Networks themselves may face competition from actors with opposing interests to theirs. Several R&D networks may compete with one another. The firm as a network of employees obviously faces competition. In particular, given the importance of connectivity for networks, competing networks may try to disrupt each other, by trying to convince key players in competing networks to defect, or to stop sponsoring key links (strategic network disruption). In response, networks that face competition will adapt their structure, and will avoid vulnerable network structures. Such network competition is what our paper is concerned with. |
| Keywords: | Strategic Network Disruption, Strategic Network Design, Noncooperative Network Games |
| JEL: | C72 D85 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:use:tkiwps:1013&r=net |
| By: | Pierre-Alexandre Balland; Raphael Suire; Jerome Vicente |
| Abstract: | This paper contributes to the empirical identification of geographical and structural properties of innovative networks, focusing on the particular case of Global Navigation Satellite Systems (GNSS) at the European level. We show that knowledge bases of organizations and knowledge phases of the innovation process are the critical factors in determining the nature of the interplay between structural and geographical features of knowledge networks. Developing a database of R&D collaborative projects of the 5th and 6th European Framework Programs, we propose a methodology based on social network analysis. Its originality consists in starting from a bimodal network, in order to deduce two affiliation matrixes that allow us to study both the properties of the organization network and the properties of the project network. The results are discussed in the light of the mutual influence of the cognitive, structural and geographical dimensions on knowledge production and diffusion, and in the light of the knowledge drivers that give rise to the coexistence of a relational core-periphery structure with a geographical cluster and pipeline structure. |
| Keywords: | Economic Geography, Knowledge networks, Social network analysis, EU Framework Programs, GNSS |
| JEL: | O32 R12 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1008&r=net |
| By: | Lea Cassar; Bruno S. Frey |
| Abstract: | This paper suggests that institutional factors which reward social net- works at the expenses of productivity can play an important role in ex- plaining brain drain. The e¤ects of social networks on brain drain are analyzed in a decision theory framework with asymmetric information. We distinguish between the role of insidership and personal connections. The larger the cost of being an outsider, the smaller is the number and the average ability of researchers working in the domestic job market. Per- sonal connections partly compensate for this e¤ect by attracting highly connected researchers back. However, starting from a world with no dis- tortions, personal connections also increase brain drain. |
| Keywords: | Brain Drain; Social Networks; Institutions; Asymmetric In- formation; Italian Academia |
| JEL: | D82 F22 I20 J24 J44 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2010-12&r=net |