nep-net New Economics Papers
on Network Economics
Issue of 2010‒11‒20
seven papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Strategic Network Interdiction By Sunghoon Hong; Myrna Wooders
  2. The determinants of co-inventor tie formation: proximity and network dynamics By Lorenzo Cassi; Anne Plunket
  3. Network dynamics in regional clusters: The perspective of an emerging economy By Elisa Giuliani
  4. Community Structure and Market Outcomes: A Repeated Games in Networks Approach By Itay Fainmesser
  5. Social Interactions and Spillovers By Cabrales, Antonio; Calvó-Armengol, Antoni; Zenou, Yves
  6. Structural properties of cooperation networks in Germany: From basic to applied research By Tom Broekel; Holger Graf
  7. Identification of Social Interactions By Blume, Lawrence E.; Brock, William A.; Durlauf, Steven N.; Ioannides, Yannis M.

  1. By: Sunghoon Hong (Department of Economics, Vanderbilt University); Myrna Wooders (Department of Economics, Vanderbilt University)
    Abstract: We develop a strategic model of network interdiction in a non-cooperative game of flow. A security agency operates a network with arc capacities. An adversary, endowed with a bounded quantity of bads, chooses a flow that specifies a plan for carrying bads through the network from a base to a target. Simultaneously, the agency chooses a blockage, which specifies a plan for blocking the transport of bads through arcs in the network. However, the blockage of arcs disrupts the operation of the network. The adversary gains and the agency loses from the target damage and the network disruption. The adversary incurs the expense of carrying bads. We characterize the Nash equilibria in terms of the primitives of our model. Our model contributes to the literature of game theory by introducing non-cooperative behavior into a Kalai-Zemel type mode of a (cooperative) game of flow. Our research also advances models and results on network interdiction.
    Keywords: Network interdiction, Noncooperative game of flow, Blockage, Nash equilibrium, Kalai- Zemel game of flow
    JEL: C72 D85 H56
    Date: 2010–06
  2. By: Lorenzo Cassi; Anne Plunket
    Abstract: This paper investigates the determinants of co-inventor tie formation using micro-data on genomic patents from 1990 to 2006 in France. We consider in a single analysis the relational and proximity perspectives that are usually treated separately. In order to do so, we analyse the determinants of network ties that occur within existing components and between two distinct components (i.e. bridging ties). We test the argument that formation of these two different types of ties results from distinct strategies in accessing resources. Doing so, we contrast network and proximity determinants of network formation and we investigate if social network allows economic actors to cross over geographical, technological and organizational boundaries.
    Keywords: Social networks, relational perspective, proximity, co-patenting, network formation
    JEL: D85 O31 R12 Z13
    Date: 2010–11
  3. By: Elisa Giuliani
    Abstract: Regional clusters are spatial agglomerations of firms operating in the same or connected industries, which enable innovation and economic performance for firms. A wealth of empirical literature shows that one of key elements of the success of regional clusters is that they facilitate the formation of local inter-organizational networks, which act as conduits of knowledge and innovation. While most studies analyze the benefits and characteristics of regional cluster networks and focus on advanced economies and high tech Ôhot spotsÕ, this paper advances with the existing literature by analyzing network dynamics and taking an emerging economyÕs perspective. Using longitudinal data of a wine cluster in Chile and stochastic actor-oriented models for network dynamics, this paper examines what micro-level effects influence the formation of new knowledge ties among wineries. It finds that the coexistence of cohesion effects (reciprocity and transitivity) and the presence of inter-firm knowledge base heterogeneity contribute to the stability of an informal hierarchical network structure over time. Empirical results have interesting implications for cluster competitiveness and network studies, and for the burgeoning literature on corporate behavior in emerging economies.
    Keywords: Regional clusters, knowledge networks, network dynamics, wine industry, Chile
    Date: 2010–10
  4. By: Itay Fainmesser
    Abstract: Consider a large market with asymmetric information, in which sellers choose whether to cooperate or deviate and ?cheat?their buyers, and buyers decide whether to re-purchase from di¤erent sellers. We model active trade relationships as links in a buyer-seller network and suggest a framework for studying repeated games in such networks. In our framework, buyers and sellers have rich yet incomplete knowledge of the network structure; allowing us to derive meaningful conditions that determine whether a network is consistent with trade and cooperation between every buyer and seller that are connected. We show that three network features reduce the minimal discount factor necessary for sustaining cooperation: moderate competition, sparseness, and segregation. We ? nd that the incentive constraints rule out networks that maximize the volume of trade and that the constrained trade maximizing networks are in between ?old world? segregated and sparse networks, and a ?global market?
    Keywords: Buyer-Seller networks; repeated games; moral hazard;asymmetric information; trust; cooperation; institutions
    Date: 2010
  5. By: Cabrales, Antonio (Universidad Carlos III de Madrid); Calvó-Armengol, Antoni (Universitat Autònoma de Barcelona); Zenou, Yves (Dept. of Economics, Stockholm University)
    Abstract: The aim of this paper is to provide a tractable model where both socialization (or network formation) and productive efforts can be analyzed simultaneously. This permits a full-fledged equilibrium/welfare analysis of network formation with endogenous productive efforts and heterogeneous agents. We show that there exist two stable interior equilibria, which we can Pareto rank. The socially efficient outcome lies between these two equilibria. When the intrinsic returns to production and socialization increase, all equilibrium actions decrease at the Pareto-superior equilibrium, while they increase at the Pareto-inferior equilibrium. In both cases, the percentage change in socialization effort is higher (in absolute value) than that of the productive effort.
    Keywords: Peer effects; network formation; welfare
    JEL: L22 L51 O31 O38
    Date: 2010–11–08
  6. By: Tom Broekel (Department of Economic Geography, Urban & Regional Research Centre Utrecht (URU), Faculty of Geosciences, Utrecht University); Holger Graf (School of Economics and Business Administration, Friedrich-Schiller-University Jena)
    Abstract: Economists pay more and more attention to knowledge networks and drivers of their development. Consequently, a rich literature emerged analyzing factors explaining the emergence of intra-organizational links. Despite substantial work focusing on the dyad level, only little is known about how and why (global) network structures differ between technologies or industries. The study is based on a new data source on subsidized R&D cooperation in Germany, which is presented in detail and discussed with respect to other types of relational data. A comparison of networks within ten technologies allows us to identify systematic differences between basic and applied research networks.
    Keywords: R&D subsidies, network, cooperation, Foerderkatalog, Germany
    JEL: L14 I28 O38
    Date: 2010–11–12
  7. By: Blume, Lawrence E. (Cornell University, and Institute for Advanced Studies, Vienna, and Santa Fe Institute); Brock, William A. (University of Wisconsin); Durlauf, Steven N. (Department of Economics, University of Wisconsin-Madison); Ioannides, Yannis M. (Tufts University)
    Abstract: While interest in social determinants of individual behavior has led to a rich theoretical literature and many efforts to measure these influences, a mature “social econometrics” has yet to emerge. This chapter provides a critical overview of the identification of social interactions. We consider linear and discrete choice models as well as social networks structures. We also consider experimental and quasi-experimental methods. In addition to describing the state of the identification literature, we indicate areas where additional research is especially needed and suggest some directions that appear to be especially promising.
    Keywords: Social interactions, social networks, identification
    JEL: C21 C23 C31 C35 C72 Z13
    Date: 2010–10

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