nep-net New Economics Papers
on Network Economics
Issue of 2010‒11‒27
thirteen papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Networks of Economic Market Interdependence and Systemic Risk By Dion Harmon; Blake Stacey; Yavni Bar-Yam; Yaneer Bar-Yam
  2. Chinese networks and tariff evasion By Pierre-Louis Vézina; Lorenzo Rotunno
  3. A wiki for social workers in a local health authority: An actor-network analysis and seed design By Marisa Ponti; Stefano Renzi; Jane Klobas
  4. On the road to prosperity ? The economic geography of China's national expressway network By Roberts, Mark; Deichmann, Uwe; Fingleton, Bernard; Shi, Tuo
  5. Social Responsibility of Indian Microfinance: A Critical Review By Tara S Nair; Jan Postmus; Rachayeeta Pradhan
  6. Network Architecture and Mutual Monitoring in Public Goods Experiments By Carpenter, Jeffrey P.; Kariv, Shachar; Schotter, Andrew
  7. Ising-like agent-based technology diffusion model: adoption patterns vs. seeding strategies By Carlos E. Laciana; Santiago L. Rovere
  8. The Attack and Defense of Weakest-Link Networks By Dan Kovenock; Brian Roberson; Roman M. Sheremeta
  9. Iterating influence between players in a social network. By Michel Grabisch; Agnieszka Rusinowska
  10. Impact of the topology of global macroeconomic network on the spreading of economic crises By Kyu-Min Lee; Jae-Suk Yang; Gunn Kim; Jaesung Lee; Kwang-Il Goh; In-mook Kim
  11. Random–Walk–Based Segregation Measures By Marc Vorsatz; Pablo Coralio Ballester
  12. Firm Characteristic Determinants of SME Participation in Production Networks By Charles HARVIE; Dionisius NARJOKO; Sothea OUM
  13. Voluntary contributing in a neighborhood public good game: An experimental study By Berninghaus, Siegfried; Güth, Werner; Schosser, Stephan

  1. By: Dion Harmon; Blake Stacey; Yavni Bar-Yam; Yaneer Bar-Yam
    Abstract: The dynamic network of relationships among corporations underlies cascading economic failures including the current economic crisis, and can be inferred from correlations in market value fluctuations. We analyze the time dependence of the network of correlations to reveal the changing relationships among the financial, technology, and basic materials sectors with rising and falling markets and resource constraints. The financial sector links otherwise weakly coupled economic sectors, particularly during economic declines. Such links increase economic risk and the extent of cascading failures. Our results suggest that firewalls between financial services for different sectors would reduce systemic risk without hampering economic growth.
    Date: 2010–11
  2. By: Pierre-Louis Vézina; Lorenzo Rotunno (IHEID, The Graduate Institute of International and Development Studies, Geneva)
    Abstract: In this paper we combine the tariff evasion analysis of Fisman and Wei (2004) with Rauch and Trindade’s (2002) study of Chinese trade networks. Chinese networks are known to act as trade catalysts by enforcing contracts and providing market information. As tariff evasion occurs outside the law, market information is scant and formal institutions inexistent, rendering networks the more important. We find robust evidence that Chinese networks, proxied by ethnic Chinese migrant populations, increase tariff evasion, i.e. the tariff semi-elasticity of Chinese missing imports. We suggest the effects takes place through matching of illicit-minded traders, identification of corrupt customs agents and enforcement of informal contracts.
    Keywords: tariff evasion, China, illicit trade, migrant networks
    JEL: F1 K42
    Date: 2010–11
  3. By: Marisa Ponti; Stefano Renzi; Jane Klobas
    Abstract: We use actor-network theory (ANT) to understand how social workers in a large Italian local health authority might interact with a wiki space to share resources, inform practice, and maintain their professional identity. At the time of study, the wiki was proposed as a replacement technology for an existing structured knowledge management system (KMS). We introduce the case organization, the social workers and the problem and then describe the key concepts of ANT and how they can be used to guide socio-technical analysis of the potential for a proposed new information technology. ANT was applied in two ways. Firstly, we analyzed how the social workers’ existing KMS came about, using the processes of translation as defined in ANT to reconstruct the events leading to that choice and the subsequent idea of replacing the KMS with a wiki. We then used a due process model and drew the actor-network in order to consider the wiki as a potential replacement for the existing KMS. As part of this process, we present the design of a seed structure and participation process for a wiki that would both maintain the value of KMS work done to date and meet additional needs for informal learning and maintenance of professional identity among the social workers. The successful adoption and sustainability of the wiki will depend on strengthening its association with the other stakeholders participating in the project.
    Keywords: wiki, social workers, health sector, actor-network theory, Italy, seed design
    Date: 2010–11
  4. By: Roberts, Mark; Deichmann, Uwe; Fingleton, Bernard; Shi, Tuo
    Abstract: Over the past two decades, China has embarked on an ambitious program of expressway network expansion. By facilitating market integration, this program aims both to promote efficiency at the national level and to contribute to the catch-up of lagging inland regions with prosperous Eastern ones. This paper evaluates the aggregate and spatial economic impacts of China's newly constructed National Expressway Network, focussing, in particular, on its short-run impacts. To achieve this aim, the authors adopt a counterfactual approach based on the estimation and simulation of a structural"new economic geography"model. Overall, they find that aggregate Chinese real income was approximately 6 percent higher than it would have been in 2007 had the expressway network not been built. Although there is considerable heterogeneity in the results, the authors do not find evidence of a significant reduction in disparities across prefectural level regions or of a reduction in urban-rural disparities. If anything, the expressway network appears to have reinforced existing patterns of spatial inequality, although, over time, these will likely be reduced by enhanced migration.
    Keywords: Transport Economics Policy&Planning,Economic Theory&Research,Labor Policies,Roads&Highways,Regional Economic Development
    Date: 2010–11–01
  5. By: Tara S Nair; Jan Postmus; Rachayeeta Pradhan
    Abstract: This paper discusses the issue of social responsibility of Indian microfinance using two theoretical streams from business social responsibility research – stakeholder theory and social contract theory.
    Keywords: Microfinance, India, self help group, social responsibility, social contract, stakeholder, pro-poor, SHGs,
    Date: 2010
  6. By: Carpenter, Jeffrey P. (Middlebury College); Kariv, Shachar (University of California, Berkeley); Schotter, Andrew (New York University)
    Abstract: Recent experiments show that public goods can be provided at high levels when mutual monitoring and costly punishment are allowed. All these experiments, however, study monitoring and punishment in a setting where all agents can monitor and punish each other (i.e., in a complete network). The architecture of social networks becomes important when individuals can only monitor and punish the other individuals to whom they are connected by the network. We study several non-trivial network architectures that give rise to their own distinctive patterns of behavior. Nevertheless, a number of simple, yet fundamental, properties in graph theory allow us to interpret the variation in the patterns of behavior that arise in the laboratory and to explain the impact of network architecture on the efficiency and dynamics of the experimental outcomes.
    Keywords: experiment, networks, public good, monitoring, punishment
    JEL: D82 D83 C92
    Date: 2010–11
  7. By: Carlos E. Laciana; Santiago L. Rovere
    Abstract: The well-known Ising model used in statistical physics was adapted to a social dynamics context to simulate the adoption of a technological innovation. The model explicitly combines (a) an individual's perception of the advantages of an innovation and (b) social influence from members of the decision-maker's social network. The micro-level adoption dynamics are embedded into an agent-based model that allows exploration of macro-level patterns of technology diffusion throughout systems with different configurations (number and distributions of early adopters, social network topologies). In the present work we carry out many numerical simulations. We find that when the gap between the individual's perception of the options is high, the adoption speed increases if the dispersion of early adopters grows. Another test was based on changing the network topology by means of stochastic connections to a common opinion reference (hub), which resulted in an increment in the adoption speed. Finally, we performed a simulation of competition between options for both regular and small world networks.
    Date: 2010–11
  8. By: Dan Kovenock; Brian Roberson; Roman M. Sheremeta
    Abstract: This paper experimentally examines behavior in a two-player game of attack and defense of a weakest-link network of targets, in which the attacker’s objective is to successfully attack at least one target and the defender’s objective is diametrically opposed .We apply two benchmark contest success functions (CSFs): the auction CSF and the lottery CSF. Consistent with the theoretical prediction, under the auction CSF, attackers utilize a stochastic “guerilla warfare” strategy - in which a single random target is attacked - more than 80% of the time. Under the lottery CSF, attackers utilize the stochastic guerilla warfare strategy almost 45% of the time, contrary to the theoretical prediction of an equal allocation of forces across the targets.
    Keywords: Colonel Blotto, conflict resolution, weakest-link, best-shot, multi-dimensional resource allocation, experiments
    JEL: C72 C91 D72 D74
    Date: 2010–09
  9. By: Michel Grabisch (Centre d'Economie de la Sorbonne - Paris School of Economics); Agnieszka Rusinowska (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: We generalize a yes-no model of influence in a social network with a single step of mutual influence to a framework with iterated influence. Each agent makes an acceptance- rejection decision and has an inclination to say either ‘yes’ or ‘no’. Due to influence by others, an agent's decision may be different from his original inclination. Such a transformation from the inclinations to the decisions is represented by an influence function. We analyze the decision process in which the mutual influence does not stop after one step but iterates. Any classical influence function can be coded by a stochastic matrix, and a generalization leads to stochastic influence functions. We apply Markov chains theory to the analysis of stochastic binary influence functions. We deliver a general analysis of the convergence of an influence function and then study the convergence of particular influence functions. This model is compared with the Asavathiratham model of influence. We also investigate models based on aggregation functions. In this context, we give a complete description of terminal classes, and show that the only terminal states are the consensus states if all players are weakly essential.
    Keywords: Social network, influence, stochastic influence function, convergence, terminal class, Markov chains, aggregation function.
    JEL: C7 D7
    Date: 2010–11
  10. By: Kyu-Min Lee; Jae-Suk Yang; Gunn Kim; Jaesung Lee; Kwang-Il Goh; In-mook Kim
    Abstract: Throughout economic history, the global economy has experienced recurring crises. The persistent recurrence of such economic crises calls for an understanding of their generic features rather than treating them as singular events. Global economic system is a highly complex system and can best be viewed in terms of a network of interacting macroeconomic agents. In this regard, from the perspective of collective network dynamics, here we explore how the topology of global macroeconomic network affects the patterns of spreading of economic crises. Using a simple toy model of crisis spreading, we demonstrate that an individual country's role in crisis spreading is not only dependent on its gross macroeconomic capacities, but also on its local and global connectivity profile in the context of the world economic network. We find that on one hand clustering of weak links at the regional scale can significantly aggravate the spread of crises, but on the other hand the current network structure at the global scale harbors a higher tolerance of extreme crises compared to more "globalized" random networks. These results suggest that there can be a potential hidden cost in the ongoing globalization movement towards establishing less-constrained, trans-regional economic links between countries, by increasing the vulnerability of global economic system to extreme crises.
    Date: 2010–11
  11. By: Marc Vorsatz; Pablo Coralio Ballester
    Abstract: In this paper, we propose an intuitive way of how to measure residential segregation. Individuals are located in different nodes on a network that are interconnected through links. Each period, an individual either advances to an adjacent node or she stops moving. In this setting, the segregation index is then defined as the probability that a randomly chosen individual meets an individual of the same social group in the neighborhood where her random-walk terminates. It is shown in a dual theorem that the segregation index is as a natural generalization of the isolation index to networks and that it is proportional to the PageRank index applied by Google in order to determine the importance of web-pages. Finally, the segregation index is applied to the Spanish 2009 census tract data and compared with other prominent measures.
    Date: 2010–11
  12. By: Charles HARVIE (Centre for Small Business and Regional Research School of Economics, University of Wollongong, Australia); Dionisius NARJOKO (Economic Research Institute for ASEAN and East Asia (ERIA)); Sothea OUM (Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: This paper provides an empirical analysis of small and medium enterprise (SME) participation in production networks. It gauges firm characteristic determinants of SME participation in production networks. The empirical investigation utilizes results obtained from an ERIA Survey on SME Participation in Production Networks, conducted over a three month period at the end 2009 in most ASEAN countries (i.e., Thailand, Indonesia, Malaysia, Philippines, Vietnam, Cambodia, and Laos PDR) and China. The results suggest that productivity, foreign ownership, financial characteristics, innovation efforts, and managerial/entrepreneurial attitudes are the important firm characteristics that determine SME participation in production networks. The paper extends the analysis to identify the determinants that allow SMEs to move from low to high quality or value adding participation in production networks. The results suggest that size, productivity, foreign ownership, and, to some extent, innovation efforts and managerial attitudes, are the important firm characteristics needed by SMEs to upgrade their positions in production networks. The finding suggests that SMEs really exploit competitiveness from economies of scale only when they are able to engage in production networks.
    Date: 2010–10–01
  13. By: Berninghaus, Siegfried; Güth, Werner; Schosser, Stephan
    Abstract: In repeated Public Good Games contributions might be influenced by different motives. The variety of motives for deciding between (more or less) free-riding probably explains the seemingly endless tradition of theoretical and experimental studies of repeated Public Good Games. To more clearly distinguish the motives, we try to enrich the choice set by allowing players not only to contribute but also to locate their contribution to one of the player positions. The location choice affects what individual players gain, but not the overall efficiency of contributing, and allows for discrimination, e.g., rewarding and sanctioning co-players differently. Our experimental results show that adding location choice promotes voluntary cooperation, although discrimination itself has no signifficant effect on behavior. --
    Keywords: Public Good Game,Neighborhood,Cooperation,Experimental Analysis
    Date: 2010

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