nep-net New Economics Papers
on Network Economics
Issue of 2011‒01‒16
seven papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  2. On the role of consumer expectations in markets with network effects By Suleymanova, Irina; Wey, Christian
  3. Competition in the Turkish mobile telecommunications market: Price elasticities and network substitution By Haucap, Justus; Heimeshoff, Ulrich; Karacuka, Mehmet
  4. The Dynamics of the Inventor Network in German Biotechnology: Geographical Proximity versus Triadic Closure By Anne L.J. Ter Wal
  5. Competitive capabilities in territorially clustered firms: The strong-tied and cognitive-cohesive social network effect By Bárbara Larrañeta Gómez-Caminero; F. Xavier Molina-Morales
  6. Learning about one’s own type in two-sided search By Akiko Maruyama
  7. Economics of co-authorship By Bruno, Bruno

  1. By: Gheorghe MINCULETE (“Carol I“ National Defense University, Bucharest); Polixenia OLAR (“Carol I“ National Defense University, Bucharest)
    Abstract: There are stories about successes but also about failures referring to franchise and network marketing businesses. Considering the similarities and differences they offer, it is necessary to correctly indicate them for a certain situation. If someone wants to find out the perfect moment for a proper business, he must determine its sense; he must also compare and make a clear difference between its applicability through network marketing or franchise acquisition. There are great stories about success, in both categories, as well as stories of monumental failure and financial loss. A careful analysis and comparison will help one businessman to understand the risks and costs involved; he can also develop the proper opportunity for the unique situation that he turns it into account with specific financial tools. According to the American specialists, network marketing is the “the supreme synergy” as it combines the best parts of the franchise concept with the best parts of the exponential growth. For a clear image, we would like to review the two concepts and the relationships between them. "
    Keywords: franchise, network marketing, business, product, service, network distributors.
    JEL: O17
    Date: 2010–08
  2. By: Suleymanova, Irina; Wey, Christian
    Abstract: We analyze the role of consumer expectations in a Hotelling model of price competition when products exhibit network effects. Expectations can be strong (stubborn), weak (price-sensitive) or partially stubborn (a mix of weak and strong). As a rule, the price-sensitivity of demand declines when expectations are more stubborn. An increase of stubbornness i) reduces competition, ii) increases (decreases) the parameter region with a unique duopoly equilibrium (multiple equilibria), iii) reduces the conflict between consumer and social preferences for de facto standardization, and iv) reduces the misalignment between consumer and social preferences for compatibility. --
    Keywords: Network Effects,Expectations,Duopoly,Compatibility,Welfare
    JEL: D43 D84 L13
    Date: 2010
  3. By: Haucap, Justus; Heimeshoff, Ulrich; Karacuka, Mehmet
    Abstract: This paper estimates demand elasticities for the Turkish mobile telecommunication market. In contrast to most other studies, firm level data is used to estimate dynamic panel data models including instrumental variable techniques. Both short- and long-run elasticities are calculated, yielding a long-run price elasticity of -0.72 for the post-paid market and of -0.33 for the pre-paid market. The short-run price elasticity is estimated to be -0.36 for the post-paid market and -0.20 for the pre-paid market. In addition, evidence of fixed to mobile traffic substitution is provided for consumers that use pre-paid cards. --
    Keywords: mobile telecommunications,price elasticity,network substitution,dynamic panel data analysis
    JEL: C23 L13 L96
    Date: 2010
  4. By: Anne L.J. Ter Wal
    Abstract: Economic geography has developed a stronghold analysing how geography impacts innovation. Yet, despite increased interest in networks, a critical assessment of the role of geography in the evolution of networks is still lacking. This paper juxtaposes geographical proximity with the network of prior ties as alternative mechanisms for tie formation. Analysing the evolution of inventor networks in German biotechnology, the paper theoretically argues and empirically demonstrates that - as the technological regime of an industry changes over time - inventors increasingly rely on network resources by forming links to partners of partners, whilst the direct impact of geographical proximity on tie formation decreases.
    Keywords: network evolution, geographical proximity, triadic closure, inventor networks
    JEL: D85 L14 L65 R11
    Date: 2011–01
  5. By: Bárbara Larrañeta Gómez-Caminero (Department of Business Administration, Universidad Pablo de Olavide); F. Xavier Molina-Morales (Department of Business Administration & Marketing, Universitat Jaume I Castellon)
    Abstract: Recent studies are supporting the idea that understanding the dynamics of firms’ value creation requires a complex and indirect association with their relational or social resources. In particular, in bounded geographical contexts this approach is replacing initial, perhaps too simplistic, assumptions. With this paper our aim is to contribute to this growing stream of research. The work focuses on the specific effects of the strength of ties and the cognitive cohesion of clustered firms on the development of their competitive capabilities. We formed a unique dataset based on a sample of 116 clustered firms from the Spanish fishing sector, where competition is based on efficiency more than on differentiation or any other valuable activity. Our results show that the cognitive cohesion of a clustered firm has a positive curvilinear relation with its competitive capabilities. Yet, contrary to expectations, the strength of ties of a clustered firm has a significant negative curvilinear relation with its competitive capabilities. The implications and contribution of our findings to the literature on both social capital and regional clusters are discussed.
    Keywords: Social capital, tie strength, cognitive cohesion, regional clusters, competitive capabilities.
    Date: 2010–12
  6. By: Akiko Maruyama (National Graduate Institute for Policy Studies)
    Abstract: This paper is an analysis of a two-sided search model in which agents are vertically heterogeneous and some agents do not know their own types. Agents who do not know their own types update their beliefs about their own types through the offers or rejections that they receive from others. In the belief-updating process, an agent who is unsure of his or her own type frequently behaves as an over- or underconfident agent. In this paper, we show that this apparent over- or underconfidence influences both on the individual’s and other agents’ matching behaviors. We show, especially, that the apparent overconfidence of some agents prevents the lowest-type agents from matching in an equilibrium.
    Keywords: two-sided search; imperfect self-knowledge; overconfidence; looking-glass self
    JEL: D82 D83 J12
    Date: 2010–12
  7. By: Bruno, Bruno
    Abstract: Starting from the literature on the rising incidence of co-authorship in economics, choices about co-authorship are analyzed with a theoretical model, assuming that authors optimize the returns from publications. Results show that co-authorship behavior depends both on the technology of the production of economic research and on the reward system that a researcher faces. Two pay structures are considered, one that is proportional to the number of authors and one that is not. The researchers’ heterogeneity implies a trade-off for the policy maker between the objective of effort maximization and the objective of selection of better researchers. The trade-off is more relevant when low-quality researchers choose to engage in opportunistic behavior to gain from higher-quality collaborations.
    Keywords: Co-authorship; Academic research; returns from publications
    JEL: D0 J40 A11
    Date: 2010–12

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