nep-net New Economics Papers
on Network Economics
Issue of 2010‒10‒30
ten papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Is conformism desirable? Network effects, location choice, and social welfare in a duopoly By L. Savorelli
  2. Technology Diffusion with Learning Spillovers: Patent versus Free Access By Matthieu Glachant; Yann Ménière
  3. An Analysis of the Openness of the Web2.0 Service Network Based on Two Sets of Indices for Measuring the Impact of Service Ownership By Kibae Kim; Jorn Altmann; Junseok Hwang
  4. On the Correlation between Research Performance and Social Network Analysis Measures Applied to Research Collaboration Networks By Alireza Abbasi; Jorn Altmann
  5. Friends' Networks and Job Finding Rates By Cappellari, Lorenzo; Tatsiramos, Konstantinos
  6. A double network approach to international production. By Roberto Schiattarella; Antonello Zanfei
  7. Understanding the Dimensions of Young Consumer Vulnerability in the Web 2.0 Society By Wided Batat
  8. Diverging Paths to a Network World: Computerizing Spanish and British Savings Banks, 1960-1990 By Maixe-Altes, J. Carles
  9. Perfect and Imperfect Real-Time Monitoring in a Minimum-Effort Game By Cary Deck; Nikos Nikiforakis
  10. Railroads of the Raj: Estimating the Impact of Transportation Infrastructure By Dave Donaldson

  1. By: L. Savorelli
    Abstract: In this paper we study a duopoly where the network e¤ect is nonmonotone and the network can be overloaded. The firms choose prices and locations endogenously, and the agent's utility is influenced by the number of people patronizing the same firm she does. We determine the market equilibrium, and we study how the network effect influences social welfare. We compare this setting with the standard horizontal differentiation model with no network effects to understand whether and how conformism is socially desirable. The results show that whether network effects are desirable depends on how people are conformist, and whether overloading is feasible. If overloading is not possible (in either of the firm's network), and the total consumers' mass is sufficiently high, a network effect which is slightly concave increases social welfare. By contrast, if overloading is feasible, and the total consumers' mass is sufficiently small, social welfare is increased if the network effect is more concave than in the previous case.
    JEL: L14 D62
    Date: 2010–10
  2. By: Matthieu Glachant (CERNA - Centre d'économie industrielle - Mines ParisTech); Yann Ménière (CERNA - Centre d'économie industrielle - Mines ParisTech)
    Abstract: The paper analyzes the interplay between technology diffusion and patent law. We develop a dynamic model where initial adoptions generate learning spillovers that reduce the cost of subsequent adoptions. In this setting, we contrast technology diffusion paths under competitive supply, subsidized adoption and patent protection. Competitive supply entails various coordination failures that cannot be fully …fixed through a public subsidy. We show that a patent holder can internalize externalities more efficiently, insofar as patent protection is fully effective. By contrast, fully competitive supply may be more efficient when patent enforcement is imperfect.
    Keywords: Technology diffusion; intellectual property rights; price discrimination; learning spillovers
    Date: 2010
  3. By: Kibae Kim (Technology Management, Economics, and Policy Program (TEMEP), Seoul National University); Jorn Altmann (Technology Management, Economics, and Policy Program (TEMEP), Seoul National University); Junseok Hwang (Technology Management, Economics, and Policy Program (TEMEP), Seoul National University)
    Abstract: One of the important characteristics of Web2.0 is the collaboration between Web2.0 service providers. They allow users (i.e., providers, developers, consumers) to combine their services. The prerequisite for this collaboration is openness of the Web2.0 service system. Although the Web2.0 technology allows the linking of different heterogeneous Web2.0 services freely, it is only assumed that the Web2.0 system is socially open as well. Until now, it has not been studied whether it is socially open and, if so, to what degree. In this paper, we address this shortcoming by creating and analyzing the Web2.0 service network. The nodes of this network are Web2.0 services and links represent the existence of mashups. In order to measure how much the Web2.0 service network is socially open, we use six openness indices, which are based on Krackhardt and Stern¡¯s EI-Index. Our results show that the Web2.0 is not fully socially open. The reason is that users of Web2.0 services do not leverage the openness provided by the technology. Instead, they prefer using Web2.0 services of those providers that they already know, i.e. the ownership of the service impacts the users¡¯ choices.
    Keywords: Web2.0 Service, Mashup, Social Network Analysis, Openness, Subgroups.
    JEL: C02 C43 D02 D21 D23 D85 L14 L16 L22 L86 M21 O31 O32 O33
    Date: 2010–10
  4. By: Alireza Abbasi (Technology Management, Economics, and Policy Program (TEMEP), Seoul National University); Jorn Altmann (Technology Management, Economics, and Policy Program (TEMEP), Seoul National University)
    Abstract: In this study, we develop a theoretical model based on social network theory to understand how the collaboration (co-authorship) network of scholars correlates to the research performance of scholars. For this analysis, we use social network analysis (SNA) measures (i.e., normalized closeness centrality, normalized betweenness centrality, efficiency, and two types of degree centrality). The analysis of data shows that the research performance of scholars is positively correlated with two SNA measures (i.e., weighted degree centrality and efficiency). In particular, scholars with strong ties (i.e., repeated co-authorships, i.e., high weighted degree centrality) show a better research performance than those with low ties (e.g., single co-authorships with many different scholars). The results related to efficiency show that scholars, who maintain a strong co-authorship relationship to only one co-author of a group of linked co-authors (i.e., co-authors that have joined publications), perform better than those researchers with many relationships to the same group of linked co-authors.
    Keywords: Social Network Analysis, Co-authorship Network, Researchers' Performance.
    JEL: C43 C44 C65 D80 D85 M12 M21
    Date: 2010–10
  5. By: Cappellari, Lorenzo (Università Cattolica del Sacro Cuore); Tatsiramos, Konstantinos (IZA)
    Abstract: We investigate the effect of social interactions on labor market outcomes using a direct measure of social contacts based on information about individuals’ three best friends and their characteristics. We examine the effect of the number of employed friends on the transition from non-employment to employment, and we find the existence of significant network effects at the individual level. An additional employed friend increases the probability of finding a job by 3.7 percentage points. This finding is robust to specifications that address the endogeneity of friends’ employment status, which may be induced by correlation with unobserved individual attributes and feedback effects. Considering labor market outcomes, we find evidence of higher wages and employment stability for those with more employed friends, which is consistent with networks acting as an information transmission mechanism.
    Keywords: friendship ties, unemployment, networks
    JEL: J64
    Date: 2010–10
  6. By: Roberto Schiattarella (University of Camerino (Italy)); Antonello Zanfei (Department of Economics, Università di Urbino "Carlo Bo")
    Abstract: This paper discusses some key implications of the view, emerged in the literature, that multinational firms organise their activities by connecting internal networks of subsidiaries with external networks of contractual relationships. It is argued that this view provides some useful elements for a more comprehensive theory of multinational change and for the analysis of the impact of internationalisation on economic systems of origin and destination. A “double network approach” to international production implies a fundamental change of focus from the “center” of multinationals – the headquarters – to the “periphery” of transnational organisations, and from individual decision making units to collective choices involving a variety of inter-linked actors. Moreover, it highlights the complexities of decision making processes associated to the increasing number and interdependencies of internal and external actors involved in international production.
    Keywords: Foreign Investment, Multinational Firm.
    JEL: F10 F23 O33
    Date: 2010
  7. By: Wided Batat (COACTIS - Université Lumière - Lyon II : EA4161 - Université Jean Monnet - Saint-Etienne)
    Abstract: The young consumers constitute one of the fastest growing Internet populations. This group of consumers spends more time online than adults and surpasses all other age groups in their use of chat, instant messaging and other new forms of electronic communication. Thus, Internet technologies have the potential to promote a power shift from sellers to buyers. Consequently, the global reach of the Internet facilitates young consumer access to more market information that involves larger choice sets, consumer ability to exchange information and opinion with peers. We can argue that teenagers are fully competent consumers because almost adolescents revealed competency in some aspects of consumption such as: using Internet and blogs to improve their consumption skills, comparison shopping, innovation by consumption and usage. However, teenagers could be considered as victimised consumers because of their vulnerability and the lack of their experiences and knowledge in terms of consumption and purchasing. In addition, today's young consumers are facing a new risk related to technologies usages. In order to develop a better understanding of young consumers' vulnerability, it is important to explore the areas and the behaviours associated with the vulnerable young consumers within a marketplace surrounded by technologies.
    Keywords: young consumer, vulnerability, Web 2.0, Consumption, education, consumer policy, competence
    Date: 2010–06–23
  8. By: Maixe-Altes, J. Carles
    Abstract: The development of shared data processing networks and their consequences for new retail banking services from the 1960s to the 1980s in both Spanish and British savings banks are the topic of this research. Each of the two competitive environments responded in its own way to the processes of technological and organizational change. As a result this paper observes cross-country variations in the presence of convergence and globalisation. This approach focus on the impact of computer communication networks as a result of corporate strategy in Spanish savings banks. But relevant aspects of computerization in Britain are considered to highlight the adaptative capacity of technology in different environments. Also this paper considers organizational forms with similar root in their corporate governance to enable a degree of homogeneity of the analysis of technological change.
    Keywords: technological change; computer communication networks; computerization; regulatory change; savings banks; retail banks; TSB; collaboration; Spain; UK
    JEL: N20 N70 N2
    Date: 2010–09
  9. By: Cary Deck (University of Arkansas and Economic Science Institute); Nikos Nikiforakis (Department of Economics, University of Melbourne)
    Abstract: This paper presents the results from a minimum-effort game in which individuals can observe the choices of others in real time. We find that under perfect monitoring almost all groups coordinate at the payoff-dominant equilibrium. However, when individuals can only observe the actions of their immediate neighbors in a circle network, monitoring improves neither coordination nor efficiency relative to a baseline treatment without real-time monitoring. We argue that the inefficiency of imperfect monitoring is due to information uncertainty, that is, uncertainty about the interpretation of the information available regarding the actions of others.
    Keywords: minimum effort game, information uncertainty, real time monitoring, circle network, cheap talk
    JEL: C72 C92 D82
    Date: 2010
  10. By: Dave Donaldson
    Abstract: How large are the benefits of transportation infrastructure projects, and what explains these benefits? To shed new light on these questions, this paper uses archival data from colonial India to investigate the impact of India's vast railroad network. Guided by four predictions from a general equilibrium trade model, I find that railroads: (1) decreased trade costs and interregional price gaps; (2) increased interregional and international trade; (3) increased real income levels; and (4), that a sufficient statistic for the effect of railroads on welfare in the model (an effect that is purely due to newly exploited gains from trade) accounts for virtually all of the observed reduced-form impact of railroads on real income in the data. I find no spurious effects from over 40,000 km of lines that were approved but - for four different reasons - were never built.
    JEL: F15 N15 N75 O1 R13 R4
    Date: 2010–10

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