nep-net New Economics Papers
on Network Economics
Issue of 2011‒08‒09
twelve papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Competition and Industry Structure for International Rail Transportation By Friebel, Guido; Ivaldi, Marc; Pouyet, Jérôme
  2. Doctors’ remuneration schemes and hospital competition in two-sided markets with common network externalities By David Bardey Helmuth Cremer Jean-Marie Lozachmeur
  3. Heterogeneity and the Dynamics of Technology Adoption By Stephen P. Ryan; Catherine Tucker
  4. A Network Approach to the Economic Models of Fertility By YOUM Yoosik
  5. The network of global corporate control By Stefania Vitali; James B. Glattfelder; Stefano Battiston
  6. Production Networks in Asia: A Case Study from the Hard Disk Drive Industry By Hiratsuka, Daisuke
  7. SGL: Stata Graph Library for network analysis By Hirotaka Miura
  8. A Few Special Cases: Scientific Creativity and Network Dynamics in the Field of Rare Diseases. By Massimo Riccaboni; Maria Laura Frigotto
  9. Wettbewerb im Internet: Was ist online anders als offline? By Haucap, Justus; Wenzel, Tobias
  10. Ökonomische Grundlagen des Wettbewerbs im Internet By Kruse, Jörn
  11. Energy service companies in China: The role of social networks and trust By Kostka, Genia; Shin, Kyoung
  12. Why Has the Border Effect in the Japanese Machinery Sectors Declined? The Role of Business Networks in East Asian Machinery Trade By Kyoji Fukao; Toshihiro Okubo

  1. By: Friebel, Guido (Goethe University Frankfurt); Ivaldi, Marc (Toulouse School of Economics); Pouyet, Jérôme (Paris School of Economics)
    Abstract: This paper investigates various options for the organization of the railway industry when network operators require the access to multiple national networks to provide international (freight or passenger) transport services. The EU rail system provides a framework for our analysis. Returns-to-scale and the intensity of competition are key to understanding the impact of vertical integration or separation between infrastructure and operation services within each country in the presence of international transport services. We also consider an option in which a transnational infrastructure manager is in charge of oering a coordinated access to the national networks. In our model, it turns out to be an optimal industry structure.
    Keywords: Network access, Vertical separation, Transport economics
    JEL: L14 L42 L51 L92
    Date: 2011–07–18
  2. By: David Bardey Helmuth Cremer Jean-Marie Lozachmeur
    Abstract: ABSTRACT: This paper uses a two-sided market model of hospital competition to study the implications of different remunerations schemes on the physicians'side. The two-sided market approach is characterized by the concept of common network externality (CNE)introduced by Bardey et al. (2010). This type of externality occurs when occurs when both sides value, possibly with di¤erent intensities, the same network externality. We explicitly introduce e¤ort exerted by doctors. By increasing the number of medical acts (which involves a costly e¤ort) the doctor can increase the quality of service o¤ered to patients (over and above the level implied by the CNE). We first consider pure salary,capitation or fee-for-service schemes. Then, we study schemes that mix fee-for-service with either salary or capitation payments. We show that salary schemes (either pure or in combination with fee-for-service) are more patient friendly than (pure or mixed)capitations schemes. This comparison is exactly reversed on the providers'side. Quite surprisingly, patients always loose when a fee-for-service scheme is introduced (pure of mixed). This is true even though the fee-for-service is the only way to induce the providers to exert e¤ort and it holds whatever the patients'valuation of this effort. In other words, the increase in quality brought about by the fee-for-service is more than compensated by the increase in fees faced by patients.
    Date: 2011–08–01
  3. By: Stephen P. Ryan; Catherine Tucker
    Abstract: We estimate the demand for a videocalling technology in the presence of both network effects and heterogeneity. Using a unique dataset from a large multinational firm, we pose and estimate a fully dynamic model of technology adoption. We propose a novel identification strategy based on post-adoption technology usage to disentangle equilibrium beliefs concerning the evolution of the network from observed and unobserved heterogeneity in technology adoption costs and use benefits. We find that employees have significant heterogeneity in both adoption costs and network benefits, and have preferences for diverse networks. Using our estimates, we evaluate a number of counterfactual adoption policies, and find that a policy of strategically targeting the right subtype for initial adoption can lead to a faster-growing and larger network than a policy of uncoordinated or diffuse adoption.
    JEL: C10 L10 O32
    Date: 2011–07
  4. By: YOUM Yoosik
    Abstract: Since its first appearance in the late 1950s, Neoclassical economic theory of fertility, especially as exemplified by Gary Becker's model of household production function that assumed a unitary utility function of the household, has become one of the most popular paradigms to examine fertility changes. This paper intends to expand the economic model by incorporating the social network approach into the original paradigm. Social networks are crucial in determining the fertility rate of a society above and beyond parameters originally included in the neoclassical economic model in two ways. First, the extent that separate utilities of spouses could be treated in one function is, in part, dependent on the network embeddedness of spouses: intra-household network. If spouses are not embedded into each other's networks, it would be natural to drop the assumption of the unitary utility function and reformulate the decision process based on bargaining. Second, in addition to the intra-household network, inter-house networks also play a role in couple's decisions with regard to fertility. Couples need information about other couples' fertility decisions for their own and also normative pressures from other couples or friends are crucial in the dynamic process of fertility change. Social networks are a major conduit both for information and normative constraints. This paper focuses on the first kind of networks (intra-household networks) with illustrative empirical results by using the two waves of Korean Longitudinal Survey of Women and Families (KLOWF).
    Date: 2011–08
  5. By: Stefania Vitali; James B. Glattfelder; Stefano Battiston
    Abstract: The structure of the control network of transnational corporations affects global market competition and financial stability. So far, only small national samples were studied and there was no appropriate methodology to assess control globally. We present the first investigation of the architecture of the international ownership network, along with the computation of the control held by each global player. We find that transnational corporations form a giant bow-tie structure and that a large portion of control flows to a small tightly-knit core of financial institutions. This core can be seen as an economic "super-entity" that raises new important issues both for researchers and policy makers.
    Date: 2011–07
  6. By: Hiratsuka, Daisuke (Asian Development Bank Institute)
    Abstract: Production networks have been extensively developed in East Asia. Previous studies on production networks used international trade data or input–output tables, but such aggregate data cannot explain how the networks actually operate. With the aim of understanding the features and characteristics of East Asian production networks, this paper examines the procurement system of a hard disk drive assembler operating in Thailand. This micro-level case study found that this particular production network consists mostly of arm’s-length suppliers, who are independent and on an equal footing with the assembler.
    Keywords: east asian production networks; hard disk drive industry
    JEL: F14 F15 F23
    Date: 2011–07–28
  7. By: Hirotaka Miura (Federal Reserve Bank of San Francisco)
    Abstract: Network analysis is becoming a popular field of research. Though sophisticated packages exist for analyzing networks, such as sna, igraph, and RBGL packages developed for R and MatlabBGL implemented in Matlab, similar programs have yet to be written for Stata. I attempt to fill this void by designing the Stata Graph Library (SGL) in Mata which consists of functions that construct network centrality measures, metrics, and matrices. SGL retrieves relational data from an edge list defined by existing Stata variables or from matrices stored in Mata. SGL is built to work within Stata version 11.1 and is intended for both directed and undirected networks, either of which can be weighted by positive values or unweighted. This paper provides a brief overview of concepts related to network analysis and introduces Stata Graph Library functions that generate matrix representations, centrality measures, and clustering coefficients for directed or undirected networks with or without positive weights.
    Date: 2011–07–20
  8. By: Massimo Riccaboni; Maria Laura Frigotto
    Abstract: We develop a model of scientific creativity and test it in the field of rare diseases. Our model is based on the results of an in-depth case study of the Rett syndrome. Archival analysis, bibliometric techniques and expert surveys are combined with network analysis to identify the most creative scientists. First, alternative measures of generative and combinatorial creativity are compared. Then, we generalize our results and present a stochastic model of socio-semantic network evolution. The model predictions are tested with multiple networks of rare disease specialties. We find that new scientific collaborations among experts in a field enhance combinatorial creativity. Instead, high entry rates of novices are negatively related to generative creativity. By extending the set of useful concepts, creative scientists gain in centrality. At the same time, by increasing their centrality in the scientific community, scientists can replicate and generalize their results, thus contributing to a scientific paradigm.
    JEL: C63 L14 L26 L65 O31 O33
    Date: 2011–03
  9. By: Haucap, Justus; Wenzel, Tobias
    Abstract: Das Internet ist stark durch Wettbewerb zwischen Plattformen geprägt, welche potenzielle Tauschpartner zusammenbringen. Die Konkurrenz zwischen solchen mehrseitigen Plattformen und die Marktkonzentration wird maßgeblich bestimmt durch (1) die Stärke der indirekten Netzeffekte, (2) das Ausmaß steigender Skaleneffekte, (3) Überlastungsgefahren, (4) Differenzierung der Plattformen und (5) die Möglichkeit des sogenannten Multihoming. Je nach Ausprägung dieser Faktoren ergeben sich unterschiedliche Konzentrationstendenzen und Markteintrittsbarrieren. Pauschal lässt sich zwar nicht feststellen, dass im Internet besonders viele dauerhaft resistente Monopole anzutreffen wären und ein besonderer Regulierungsbedarf besteht. Gleichwohl zeigt sich, dass einzelne Plattformen wie z.B. ebay auf manchen Märkten durchaus beträchtliche Marktmacht besitzen, die aufgrund erheblicher Markteintrittsbarrieren auch nicht schnell erodieren wird. -- The Internet is characterized by competition between platforms which bring together potential partners of exchange. The degree of competition between these multi-sided platforms und market concentration are determined through (1) the strength of the direct and indirect network effects, (2) the extent of economies of scale, (3) the risk of congestition, (4) platform differentiation, and (5) the possibility of multi-homing. Depending on these factors different market concentrations and barriers to entry result. While there is no general tendency for concentration in the Internet and no general need for special market regulation of online content providers and intermediaries, single platforms may still have long lasting and significant market power which is unlikely to erode fastly, as the example of ebay illustrate.
    Date: 2011
  10. By: Kruse, Jörn
    Abstract: The main internet problem is how to deal with temporary overload, which negatively affects quality-sensitive high value services while others do not suffer. Capacity overprovisioning als well as volume tariffs will not be efficient. The optimal solution is the application of priority pricing, where higher prices are paid for higher qualities. This is economically superior to network management as well as to strict net neutrality. --
    Date: 2011
  11. By: Kostka, Genia; Shin, Kyoung
    Abstract: China's energy-service companies (ESCOs) have developed only modestly despite favorable political and market conditions. We argue that with sophisticated market institutions still evolving in China, trust-based relations between ESCOs and energy customers are essential for successful implementation of energy efficiency projects. Chinese ESCOs, who are predominantly small and private enterprises, perform poorly in terms of trust-building because they are disembedded from local business, social, and political networks. We conclude that in the current institutional setting, the ESCO model based on market relations has serious limitations and is unlikely to lead to large-scale implementation of energy efficiency projects in China. --
    Keywords: energy policies,energy service companies (ESCO),social networks,trust,China
    JEL: Q40 Q48 O53
    Date: 2011
  12. By: Kyoji Fukao; Toshihiro Okubo
    Abstract: This paper analyzes the impact of firm networks on Japan's national border effect. We estimate gravity equations using data on Japan's international and interregional trade in four machinery industries (electrical, general, precision and transportation machinery). The machinery sector is the most important manufacturing sector for exports and outward foreign direct investment (FDI) in Japan. By taking into account international as well as interregional firm networks, we find that ownership relations usually enhance exports from parent firms to establishment. Consequently we can explain 15% (7%, 1% and 0.5%) of the decline in Japan's border effect from 1980 to 1995 in precision (transportation, general electrical) machinery sector by the increase of international networks.
    Keywords: Gravity model, Border effect, Firm networks, Fragmentation
    JEL: F14 F17 F21 L14
    Date: 2011–08

This nep-net issue is ©2011 by Yi-Nung Yang. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.