nep-net New Economics Papers
on Network Economics
Issue of 2011‒01‒30
nine papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Price Coordination in Two-Sided Markets: Competition in the TV Industry By Jarle Kind, Hans; Nilssen, Tore; Sørgard, Lars
  2. Merger enforcement in two-sided markets By Przemyslaw Jeziorski
  3. Does Information Network Affect Technology Diffusion? By Goswami, Rupak; Basu, Debabrata
  4. Network Topology and Equilibrium Existence in Weighted Network Congestion Games By Igal Milchtaich
  5. The microstructure of the money market before and after the financial crisis: a network perspective By Silvia Gabrieli
  6. Meaning and function in the theory of consumer choice: dual selves in evolving networks By Herrmann-Pillath, Carsten
  7. Networks of Collaboration in Multi-market Oligopolies By Billand, Pascal; Bravard, Christophe; Chakrabarti, Subhadip; Sarangi, Sudipta
  8. Bilateral and Community Enforcement in a Networked Market with Simple Strategies By Itay P. Fainmesser; David A. Goldberg
  9. Hybrid Lateral Transshipments in a Multi-Location Inventory System By Glazebrook, K.; Paterson, Colin; Teunter, Ruud

  1. By: Jarle Kind, Hans (NHH); Nilssen, Tore (Dept. of Economics, University of Oslo); Sørgard, Lars (NHH)
    Abstract: Under the current market structure in the TV industry advertising prices are typically set by TV channels while viewer prices are set by distributors (e.g., cable operators). The latter implies that the distributors partly internalize the competition between the TV channels, since they take into account the fact that a lower viewer price at one channel will reduce the willingness to pay for rival channels. We …find that a shift to a market structure where advertising prices as well as viewer prices are set competitively by the TV channels might increase joint industry pro…ts. The reason is that this market structure, in contrast to the one we observe today, directly addresses the two-sidedness of the market. We also show that this is to the bene…t of the viewers.
    Keywords: Two-sided markets; advertising; media economics
    JEL: L13 L22 L82
    Date: 2010–11–22
  2. By: Przemyslaw Jeziorski
    Abstract: This paper studies mergers in two-sided markets by estimating a structural supply and demand model and performing counterfactual experiments. The analysis is performed on data for a merger wave in U.S. radio that occurred between 1996 and 2006. The paper makes two main contributions. First, I identify the conflicting incentives of merged firms to exercise market power on both sides of the market (listeners and advertisers in the case of radio). Second, I disaggregate the effects of mergers on consumers into changes in product variety and changes in supplied ad quantity. I find that firms have moderate market power over listeners in all markets, extensive market power over advertisers in small markets and no market power over advertisers in large markets. Counterfactuals reveal that extra product variety created by post-merger repositioning increased listeners' welfare by 1.3% and decreased advertisers' welfare by about $160m per-year. However, subsequent changes in supplied ad quantity decreased listener welfare by 0.4% (for a total impact of +0.9%) and advertiser welfare by an additional $140m (for a total impact of -$300m).
    Date: 2010–07
  3. By: Goswami, Rupak; Basu, Debabrata
    Keywords: technology transfer, agricultural information network, social network analysis, adoptiondecision, India, Consumer/Household Economics, Crop Production/Industries, Farm Management, Teaching/Communication/Extension/Profession,
    Date: 2010–11
  4. By: Igal Milchtaich
    Date: 2011–01–17
  5. By: Silvia Gabrieli (Faculty of Economics, University of Rome "Tor Vergata")
    Abstract: This paper provides an in depth microstructure analysis of the euro money market by taking a network perspective. Banks are the nodes of the networks; unsecured overnight loans form the links connecting the nodes. Daily interbank networks verify the same stylised facts documented for many real complex systems: they are highly sparse, far from being complete, exhibit the small world property and a power-law distribution of degree (the number of counterparties each bank establishes credit relationships with). On the other hand, the tendency of banks to cluster, i.e. to form groups where ties are relatively denser, is much lower than in other real networks. The time patterns of some network statistics provide interesting insights into the evolution of the potential for financial contagion; the partition of the network into smaller connected subnetworks documents a move against market integration; heterogeneous developments across banks of different size offer insights into banks’ behaviour. An analysis of banks’ prominence in the market is undertaken using centrality measures: the various indicators suggest that the biggest banks are also the most connected before the onset of the crisis; however, medium/small and very small banks’ centralities increase progressively after August 2007 as these banks increase their “influence” as liquidity providers. The rich set of measures described in this paper represents a key input for future research.
    Keywords: Network analysis; Network centrality indicators; Money market; Financial crisis
    JEL: D85 G10 G21
    Date: 2011–01–19
  6. By: Herrmann-Pillath, Carsten
    Abstract: Building on the philosophy of Charles Sanders Peirce, recent advances in biosemiotics have resulted into a concise framework for the analysis of signs in living systems. This paper explores the potential for economics and shows how biosemiotics can integrate two different research agendas, each of which are also connected with biological theories, namely neuroeconomics and the theory of networks. I introduce the triadic conceptual framework established by Peirce which distinguishes between object, sign and interpretant and the corresponding causal forces in evolving hierarchical systems. This framework is used to systematize recent results of neuroeconomics in the form of the dual selves approach, following early contributions of James Coleman, partitioning the individual into the acting self and the object self. This distinction implies that there is a fundamental information asymmetry between the two selves. Against this background, the semeiotic process is an information generating and processing dynamics, which is driven by the internal selection of classificatory schemes of actions chosen and the population level dynamics of sign selection, with mimetic behavior as a driver. This can be further analyzed by means of the theory of signal selection. A central insight is that the internal information gap between acting self and object self implies a systematic role of sign processing in social networks for any kind of consumer choice. I exemplify my approach with empirical references to food consumption as a most universal and simple form of consumer choice. --
    Keywords: consumer choice,biosemiotics,dual selves,networks,signal selection
    JEL: B52 D80 Q57
    Date: 2010
  7. By: Billand, Pascal; Bravard, Christophe; Chakrabarti, Subhadip; Sarangi, Sudipta
    Abstract: The result that firms competing in a Cournot oligopoly with pairwise collaboration form a complete network under zero or negligible link formation costs provided by Goyal and Joshi (2003) no longer hold in multi-market oligopolies. Link formation in one market affects a firm’s profitability in another market in a possibly negative way resulting in the fact that it is no longer always profitable in an unambiguous manner. With non-negative link formation costs, the stable networks have a dominant group architecture and efficient networks are charecterized by at most one non-singleton component with a geodesic distance between players that is less than three.
    Keywords: networks; collaboration; R & D
    JEL: L13 L20 C70
    Date: 2010–11–01
  8. By: Itay P. Fainmesser; David A. Goldberg
    Abstract: We present a model of repeated games in large buyer-seller networks in the presence of reputation networks via which buyers share information about past transactions. The model allows us to characterize cooperation networks - networks in which each seller cooperates (by providing high quality goods) with every buyer that is connected to her. To this end, we provide conditions under which: [1] the incentives of a seller s to cooperate depend only on her beliefs with respect to her local neighborhood - a subnetwork that includes seller s and is of a size that is independent of the size of the entire network; and [2] the incentives of a seller s to cooperate can be calculated as if the network was a random tree with seller s at its root. Our characterization sheds light on the welfare costs of relying only on repeated interactions for sustaining cooperation, and on how to mitigate such costs.
    Keywords: Networks, moral hazard, graph theory, repeated games
    Date: 2011
  9. By: Glazebrook, K.; Paterson, Colin; Teunter, Ruud (Groningen University)
    Abstract: In managing networks of stock holding locations, two approaches to the pooling of inventory have been proposed. Reactive transshipm nts respond to stockouts at a location by moving inventory from elsewhere within the network, while proactive redistribution of stock seeks to minimise the chance of future shocks. This paper is the first to propose a hybrid approach in which transshipments are viewed as an opportunity for stock redistribution. We adopt a quasi-myopic approach to the development of a strongly performing hybrid transshipment policy. Numerical studies which utilise dynamic programming and simulation testify to the benefits of using transshipments proactively. In comparison to a purely reactive approach to transshipment, service levels are improved while a reduction in safety stock levels is achieved. The aggregate costs incurred in managing the system are significantly reduced, especially so for large networks facing high levels of demand.
    Date: 2010

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