nep-net New Economics Papers
on Network Economics
Issue of 2010‒07‒17
nine papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Cloud Computing Value Chains Understanding Businesses and Value Creation in the Cloud By Ashraf Bany Mohammed; Jorn Altmann; Junseok Hwang
  2. Liquidity in Credit Networks: A Little Trust Goes a Long Way By Pranav Dandekar; Ashish Goel; Ramesh Govindan; Ian Post
  3. Regulatory legacy, VoIP adoption and investment incentives By Paul de Bijl; Martin Peitz
  4. Copyright and brands in the digital age By Olivier Bomsel
  6. Innovation and Diversity in a Dynamic Knowledge Network By Tamás Sebestyén
  7. Financial Connections and Systemic Risk By Franklin Allen; Ana Babus; Elena Carletti
  8. Poverty status and the impact of social networks on smallholder technology adoption in rural Ethiopia By Liverpool, Lenis Saweda O.; Winter-Nelson, Alex
  9. Who has influence in multistakeholder governance systems? By Schiffer, Eva; Hartwich, Frank; Monge, Mario

  1. By: Ashraf Bany Mohammed; Jorn Altmann; Junseok Hwang (Technology Management, Economics, and Policy Program (TEMEP), Seoul National University)
    Abstract: Based on the promising developments in Cloud Computing technologies in recent years, commercial computing resource services (e.g. Amazon EC2) or software-as-a-service offerings (e.g. came into existence. However, the relatively weak business exploitation, participation, and adoption of other Cloud Computing services remain the main challenges. The vague value structures seem to be hindering business adoption and the creation of sustainable business models around its technology. Using an extensive analyze of existing Cloud business models, Cloud services, stakeholder relations, market configurations and value structures, this Chapter develops a reference model for value chains in the Cloud. Although this model is theoretically based on porter's value chain theory, the proposed Cloud value chain model is upgraded to fit the diversity of business service scenarios in the Cloud computing markets. Using this model, different service scenarios are explained. Our findings suggest new services, business opportunities, and policy practices for realizing more adoption and value creation paths in the Cloud.
    Keywords: Cloud computing, value chain, business models, Grid computing, service oriented computing, value networks, software-as-a-service, Grid economics, services, service sciences.
    JEL: D02 D21 D23 D46 D85 L14 L23 L86 M21
    Date: 2010–06
  2. By: Pranav Dandekar; Ashish Goel; Ramesh Govindan; Ian Post
    Abstract: Credit networks represent a way of modeling trust between entities in a network. Nodes in the network print their own currency and trust each other for a certain amount of each other's currency. This allows the network to serve as a decentralized payment infrastructure---arbitrary payments can be routed through the network by passing IOUs between trusting nodes in their respective currencies---and obviates the need for a common currency. Nodes can repeatedly transact with each other and pay for the transaction using trusted currency. A natural question to ask in this setting is: how long can the network sustain liquidity, i.e.\ how long can the network support the routing of payments before credit dries up? We answer this question in terms of the long term success probability of transactions for various network topologies and credit values. We show that a number of well-known graph families have the remarkable property that repeated transactions do not result in a loss of liquidity. Further, we show using simulations that the success probability of transactions in Erd\"{o}s-R\'{e}nyi and power-law networks depends only on average node degree and credit capacity, not on network size. Finally, we compare liquidity in credit networks to that in a centralized payment infrastructure and show that credit networks are not significantly less liquid; thus we do not lose much liquidity in return for their robustness and decentralized properties.
    Date: 2010–07
  3. By: Paul de Bijl; Martin Peitz
    Abstract: The introduction of VoIP telephony raises concerns about current regulatory practice. Access regulation has been designed for PSTN and the liberalization of the PSTN market. This paper explores the effects of access regulation of PSTN networks on consumers’ adoption of a new technology in the form of VoIP. It also discusses the link between access regulation and the incentives to invest in VoIP.
    Keywords: telecommunications; voice over broadband (VoB); voice over Internet protocol (VoIP); entry; access; regulation
    JEL: L96 L51 L13
    Date: 2010–06
  4. By: Olivier Bomsel (CERNA - Centre d'économie industrielle - Mines ParisTech)
    Abstract: The adoption of binary code as the universal standard for globalized communications generates highly positive externalities often referred to as network effects. But what about meaning? What are the externalities associated with the formatting and circulation of meaning, and are they, too,all positive? Within the digital paradigm, is it really possible to separate the notion of expression — covered by copyright — from the meanings it creates? Isn't meaning heavily dependent on the concept of brand? And if so, how do copyright and trademark institutions work together to stimulate and promote meaningful information? To answer these questions, we will look at how the meaningful forms of expression — the works — that have historically been covered by copyright generate specific types of externality, both positive and negative, giving rise to both incentive and censorship mechanisms. We will then show how the institutions of copyright and author's rights that allow the appropriation of a meaningful good also confer a brand on it, identifying its sources. This leads to mixed externalities from both directions, with the result that copyright and trademark institutions cannot be fully separated from each other.
    Keywords: copyright; brand; Intellectual Property; trademark law; media economics
    Date: 2010
  5. By: Isabel Soares (CEF.UP, Faculdade de Economia, Universidade do Porto, Portugal); Paula Sarmento (CEF.UP, Faculdade de Economia, Universidade do Porto, Portugal)
    Abstract: In this paper we discuss the European regulation policy regarding vertical separation in communications and electricity industries. In the electricity sector the discussion concerns ownership unbundling while in communications the regulatory debate is about functional separation. We conclude that for electricity, ownership unbundling seems to be the best option to achieve competition in wholesale markets although there is still some risks concerning investment. Instead, for the communication sector the regulatory options are deeply dependent on the intensity of network competition between operators that combine different technological platforms. Technology also seems to be a key driver for diverse regulatory approaches concerning the unbundling requirement.
    Keywords: unbundling, communications, electricity, next generation networks
    Date: 2010–07
  6. By: Tamás Sebestyén (Department of Economics and Regional Studies, University of Pécs)
    Abstract: In this paper we examine the evolution of network formation. We present a model in which companies in an industry can innovate alone or in alliance with others. Alliance formation is based on the cognitive distance of companies. If two companies form an alliance, their probability of success in innovation depends on their proximity in knowledge space, that is, their cognitive distance. Knowledge, on the other hand, is modelled in two dimensions: breadth and depth. The main results of our analysis are that in the present setting heterogeneity decreases among companies whilst innovation can increase and decrease also, depending on the initial parameters of the industry's knowledge endowment. The model also reveales the importance of external shocks in maintaining heterogeneity and concludes with a possible typology of cluster evolution among the dimensions of heterogeneity and innovativeness.
    Keywords: knowledge network, innovation, knowledge heterogeneity, alliance formation, cluster evolution
    JEL: I23 O18 O33 R11
    Date: 2010–03
  7. By: Franklin Allen; Ana Babus; Elena Carletti
    Abstract: We develop a model where institutions form connections through swaps of projects in order to diversify their individual risk. These connections lead to two different network structures. In a clustered network groups of financial institutions hold identical portfolios and default together. In an unclustered network defaults are more dispersed. With long term finance welfare is the same in both networks. In contrast, when short term finance is used, the network structure matters. Upon the arrival of a signal about banks’ future defaults, investors update their expectations of bank solvency. If their expectations are low, they do not roll over the debt and there is systemic risk in that all institutions are early liquidated. We compare investors’ rollover decisions and welfare in the two networks.
    Date: 2010
  8. By: Liverpool, Lenis Saweda O.; Winter-Nelson, Alex
    Abstract: Despite the promise of many new farm technologies, technology adoption rates in Ethiopia remain low. This paper studies the impact of social networks on technology adoption through social learning. In addition to geographic networks, intentional relationships are considered. The differential impacts by network type, technology, and asset poverty status are explored. We find evidence that although social learning occurs, it is more consistent for households not in poverty traps than for those that are persistently asset poor. Social learning among rural households is stronger for more complex technologies and is associated with intentional relationships rather than with geographic networks.
    Keywords: asset poverty, geographic networks, households, Poverty traps, Social networks, Technology adoption,
    Date: 2010
  9. By: Schiffer, Eva; Hartwich, Frank; Monge, Mario
    Abstract: As multistakeholder governance has emerged as an important feature in development, new governance structures that foster the participation of multiple stakeholders from the public sector, civil society, and the private sector have emerged in various fields, ranging from the management of natural resources to the provision of public services. To make such governance structures work, it is essential to understand how different stakeholders influence decisionmaking and what determines their influence. This paper uses Net-Map, an innovative participatory method, to analyze how networking influences decisionmaking in multistakeholder governance structures, using the case of the governance board of the White Volta River Basin in northern Ghana as an example. The method visualizes both the relations between all stakeholders in watershed management as perceived by the 17 members on the board and their influence on development outcomes. The study suggests that significant effects of social networking are at play beyond the formal lines of command and funding as stakeholders in watershed management make decisions. Stakeholders are more influential if they participate more prominently in information exchange and provide more advice to others. This counterbalances the overrepresentation of government actors on the board. Meanwhile some government organizations have a low level of influence, even though they are central in giving funding and command. These findings may be interesting for program leaders and policymakers in watershed management: when designing governance structures they need to take into account the importance of social networking to attain main objectives of watershed development; it is important to provide space that allows the exchange of information and advice among stakeholders. Meanwhile, policymakers and program leaders as well must consider overrepresentation of social network champions in multistakeholder governance structures and the limited capacity of government bodies in social networking. The paper serves to introduce not only the specific findings concerning this case study but also the participatory research method (Net-Map) that was used.
    Keywords: decisionmaking, multistakeholder governance, Natural resource management, Social networks,
    Date: 2010

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