nep-net New Economics Papers
on Network Economics
Issue of 2011‒07‒21
three papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Corporate competition: A self-organized network By Braha, Dan; Stacey, Blake; Bar-Yam, Yaneer
  2. Peer Effects in Education, Sport, and Screen Activities: Local Aggregate or Local Average? By Liu, Xiaodong; Patacchini, Eleonora; Zenou, Yves
  3. Dissecting Network Externalities in International Migration By Michel Beine; Frédéric Docquier; Caglar Özden

  1. By: Braha, Dan; Stacey, Blake; Bar-Yam, Yaneer
    Abstract: A substantial number of studies have extended the work on universal properties in physical systems to complex networks in social, biological, and technological systems. In this paper, we present a complex networks perspective on interfirm organizational networks by mapping, analyzing and modeling the spatial structure of a large interfirm competition network across a variety of sectors and industries within the United States. We propose two micro-dynamic models that are able to reproduce empirically observed characteristics of competition networks as a natural outcome of a minimal set of general mechanisms governing the formation of competition networks. Both models, which utilize different approaches yet apply common principles to network formation give comparable results. There is an asymmetry between companies that are considered competitors, and companies that consider others as their competitors. All companies only consider a small number of other companies as competitors; however, there are a few companies that are considered as competitors by many others. Geographically, the density of corporate headquarters strongly correlates with local population density, and the probability two firms are competitors declines with geographic distance. We construct these properties by growing a corporate network with competitive links using random incorporations modulated by population density and geographic distance. Our new analysis, methodology and empirical results are relevant to various phenomena of social and market behavior, and have implications to research fields such as economic geography, economic sociology, and regional economic development.
    Keywords: Organizational networks; Interfirm competition; Economic geography; Social networks; Spatial networks; Network dynamics; Firm size dynamics
    JEL: Z1 F0 L11 C0 D40 Z13 D85 L1 R58 O1 L14 L2 R0 L8 R12 A14 D21 L0 L25 R3 L6 D4 L7 D0 L16 L13 J10 L9 C15 L22 R11
    Date: 2011
  2. By: Liu, Xiaodong; Patacchini, Eleonora; Zenou, Yves
    Abstract: We develop two different social network models with different economic foundations. In the local-aggregate model, it is the sum of friends' efforts in some activity that affects the utility of each individual while, in the local-average model, it is costly to deviate from the average effort of friends. Even though the two models are fundamentally different in terms of behavioral foundation, their implications in terms of Nash equilibrium are relatively close since only the adjacency (social interaction) matrix differs in equilibrium, one being the row-normalized version of the other. We test these alternative mechanisms of social interactions to study peer effects in education, sport and screen activities for adolescents in the United States using the AddHealth data. We extend Kelejian's (2008) J test for spatial econometric models helping differentiate between these two behavioral models. We find that peer effects are not significant for screen activities (like e.g. video games). On the contrary, for sport activities, we find that students are mostly influenced by the aggregate activity of their friends (local-aggregate model) while, for education, we show that both the aggregate performance at school of friends and conformism matter, even though the magnitude of the effect is higher for the latter.
    Keywords: conformism; econometrics of networks; peer effects; Social networks
    JEL: A14 D85 Z13
    Date: 2011–07
  3. By: Michel Beine (CREA, University of Luxembourg, IRES, CREAM and CES-Ifo); Frédéric Docquier (and IRES, Universite Catholique de Louvain, Belgium); Caglar Özden (World Bank, Development Research Group, United States)
    Abstract: Existing migrant networks play an important role in explaining the size and structure of immigration flows. They affect the net benefits of migration by reduc- ing assimilation costs (’self-selection channel’) and by lowering legal entry barriers through family reunification programs (’immigration policy channel’). This paper presents an identification strategy allowing to disentangle the relative importance of these two channels. Then, it provides an empirical analysis based on US immi- gration data by metropolitan area and country of origin. First, we show that the overall network externality is strong: the elasticity of migration flows to network size is around one. Second, only a quarter of this elasticity is accounted for by the policy channel. Third, the policy channel was stronger in the 1990s than in the 1980s as the family reunification programs became more effective with growing diasporas. Fourth, the overall diaspora effect and the policy channel are more important for low-skilled migrants.
    Keywords: Migration, network/diaspora externalities, Immigration policy.
    JEL: F22 O15
    Date: 2011

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