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on Network Economics |
| By: | Suleymanova, Irina; Wey, Christian |
| Abstract: | We analyze Bertrand duopoly competition in markets with network effects and consumer switching costs. Depending on the ratio of switching costs to network effects, our modelerates four different market patterns: monopolization and market sharing which can be either monotone or alternating. A critical mass effect, where one firm becomes the monopolist for sure only occurs for intermediate values of the ratio, whereas for large switching costs market sharing is the unique equilibrium. For large network effcts both monopoly and market sharing equilibria exist. Our welfare analysis reveals a fundamental conflict between maximization of consumer surplus and social welfare when network effects are large. We also analyze firms' incentives for compatibility and we examine how market outcomes are affected by the switching costs, market expansion, and cost asymmetries. Finally, in a dynamic extension of our model, we show how competition depends on agents' discount factors. -- |
| Keywords: | Network Effects,Switching Costs,Bertrand Competition |
| JEL: | L13 D43 L41 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:30&r=net |
| By: | Arthur Huang; David Levinson (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota) |
| Abstract: | Anecdotal and empirical evidence has shown that road networks, destination accessibility, and travelers' choice of destination are closely related. Nevertheless, there have not been systematic investigations linking individuals' travel behavior and retail clusters at the microscopic level. Based on GPS travel data in the Twin Cities, this paper analyzes the impacts of travelers' interactions with road network structure and clustering of services at the destination on travelers' destination choice. A multinomial logit model is adopted. The results reveal that higher accessibility and diversity of services in adjacent zones of a destination are associated with greater attractiveness of a destination. Further, the diversity and accessibility of establishments in an area are often highly correlated. In terms of network structure, a destination with a more circuitous or discontinuous route dampens its appeal. Answering where and why people choose to patronize certain places, our planning, our findings shed light on the design of road networks and clusters from a travel behavior perspective. |
| Keywords: | travel behavior, destination choice, accessibility, GIS analysis, GPS travel data, road networks |
| JEL: | R30 L22 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:nex:wpaper:retaildestinations&r=net |
| By: | David Levinson (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota) |
| Abstract: | Network structure varies across cities. This variation may yield important knowledge about how the internal structure of the city affects its performance. This paper systematically com- pares a set of surface transportation network structure variables (connectivity, hierarchy, circuity, treeness, entropy, accessibility) across the 50 largest metropolitan areas in the United States. It finds most of these measures vary with city size. A set of scaling parameters are discovered to show how network size and structure vary with city size. These results suggest that larger cities are physically more inter-connected. |
| Keywords: | Connectivity, Network Structure, Transportation Geography, Network Science, City Size, Scaling Rules |
| JEL: | R41 R42 R48 D85 R14 R52 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:nex:wpaper:networkstructureandcitysize&r=net |
| By: | Carlo Drago (University of Naples Federico II); Francesco Millo (Department of Economics (University of Verona)); Roberto Ricciuti (Department of Economics (University of Verona)); Paolo Satella (Bank of Italy) |
| Abstract: | We use an innovative and extended dataset (8 years with 2,057 firms) composed of Italian listed firms. Italy appears to be an interesting case for this kind of study, due to the high presence of interlocking directorate. In particular we use Social Network Analysis to analyze the growth of the female directorship network. We also study the dynamics of change over time, and the different behavior of firms respect the growth of the female directorates. At the same time we study the impact of interlocking directorate and female interlocking directorate on equity value and firm performance. We find that interlocking directorate has a negative impact on equity value and firm performance, which is consistent with economic theory and previous literature findings. Furthermore, female interlocking directorate has no effect on firm value and performance. |
| Keywords: | Corporate Governance, Interlocking Directorships, Company Performance, Social Network Analysis, Board Diversity. |
| JEL: | C14 C23 G34 L14 M21 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:ver:wpaper:10/2011&r=net |
| By: | Dylan Kneale; Ruth Lupton |
| Abstract: | This paper is a forerunner to an empirical study of neighbourhood effects on teenage parenthood using the British Cohort Study (BCS70). It reviews evidence for the existence of such effects within the quantitative 'neighbourhood effects' literature. It also draws on the wider literature on teenage parenthood to identify three explanatory frameworks for the phenomenon (opportunity costs, differential values and social networks), and to examine the qualitative and quantitative evidence that these mechanisms vary over space in ways that create distinctive 'place effects' at different spatial scales. We conclude that while there is good reason to believe that neighbourhood and wider area influences might be associated with planned or unplanned teenage pregnancies and with the propensity to continue to parenthood, statistical evidence is mixed, and relatively sparse for the UK. Policy makers need to draw on the wider body of literature, including qualitative studies and practitioner knowledge as well as 'hard' proof of neighbourhood effects. Finally we consider implications for policy. We critically interrogate the notion that area effects and area-based policies are necessarily related and instead offer some more specific conclusions as to what the evidence implies (and does not imply) for the purpose and design of policy interventions. |
| Keywords: | neighbourhood, neighbourhood effects, area effects, teenage parenthood |
| JEL: | I30 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sticas:case141&r=net |
| By: | Filippo Belloc; Antonio Nicita; Maria Alessandra Rossi |
| Abstract: | We empirically investigate the impact of a vast array of public policies on wireline broadband penetration through a novel and unique dataset covering 30 OECD countries, over 1995-2010. We find that while both supply and demand-side policies have a positive effect on broadband penetration, their relative impact depends on the actual stage of broadband diffusion. When an advanced stage is reached, only demand-side policies appear to generate a positive and increasing effect. Moreover, both technological and market competition play a positive role, and the effect of the latter shows a non-linear path along the stage of market development. Finally, the relative weight of the service sector in the national economy reveals to be crucial for broadband penetration. Our analysis provides new insights into the policy debate and in particular on the rationale of a selective policy design for broadband penetration and, in perspective, for the rollout of next-generation networks. |
| Keywords: | telecommunications policies, broadband penetration, infrastructure investments |
| JEL: | K20 L96 O31 O57 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:615&r=net |
| By: | Aura Reggiani (University of Bologna, Italy); Peter Nijkamp (VU University Amsterdam); Alessandro Cento (KLM Royal Dutch Airlines, Milan, Italy) |
| Abstract: | Information, communication and transport networks have always been in a state of flux, while they also influence each other. Extensive research efforts have been made to investigate the dynamics in the structure and use of networks, e.g., by means of network geometries, small-world effects and scale-free phenomena. We will illustrate these new developments on the basis of airline network evolution. The present paper provides a new contribution to the analysis of topological properties of complex airline networks. Using Lufthansa's networks as an example, this paper aims to show the empirical relevance of various network indicators - such as connectivity and concentration - for understanding changing patterns in airline network configurations. After an extensive discussion of various statistical results, a decision-aid method, viz. multi-criteria analysis, is used to investigate the robustness of our findings. The results highlight the actual strategi c choices made by Lufthansa for its own network, as well in combination with its partners in Star Alliance. |
| Keywords: | airline networks; complexity; connectivity; concentration; degree distribution; network geometry; multicriteria analysis |
| JEL: | L93 |
| Date: | 2011–08–09 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20110111&r=net |
| By: | Pierre-Alexandre Balland; Mathijs de Vaan; Ron Boschma |
| Abstract: | In this paper, we study the formation of network ties between firms along the life cycle of a creative industry. We focus on three drivers of network formation: i) network endogeneity which stresses a path-dependent change originating from previous network structures, ii) five forms of proximity (e.g. geographical proximity) which ascribe tie formation to the similarity of actors' attributes; and (iii) individual characteristics which refer to the heterogeneity in actors capabilities to exploit external knowledge. The paper employs a stochastic actor-oriented model to estimate the - changing - effects of these drivers on inter-firm network formation in the global video game industry from 1987 to 2007. Our findings indicate that the effects of the drivers of network formation change with the degree of maturity of the industry. To an increasing extent, video game firms tend to partner over shorter distances and with more cognitively similar firms as the industry evolves. |
| Keywords: | network dynamics, industry life cycle, proximity, creative industry, video game industry, stochastic actor-oriented model |
| JEL: | D85 B52 O18 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1114&r=net |
| By: | Gary S. Shea |
| Abstract: | A social network of stock trading is defined for the notorious South Sea Bubble of 1720. It is a flow network defined in terms of pass-through and core pass-through, which have convenient properties with respect to inventories. These are all useful concepts when examining a liquidity crisis, financial intermediation and the changing social structure of trade. We find that there may have been a liquidity crisis suffered by goldsmith bankers before the Bubble, a gradual path towards dis-intermediation after the Bubble and a switch from intermediation based upon brokerage to intermediation based upon dealership. |
| Keywords: | East India Company; South Sea Company; Bank of England; social networks; financial intermediation; inventories; liquidity. |
| JEL: | N23 G13 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:san:cdmawp:1110&r=net |
| By: | Andrew Mays; Gary S. Shea |
| Abstract: | A new dataset, in the form of a network graph, is used to study inventory and trading behaviour amongst owners of East India Company (EIC) and Bank of England (BoE)stock around the South Sea Bubble. There was a decline in market intermediation in which the goldsmith bankers were dominant in 1720, but foreigners and Jews to some extent restored intermediation services after the Bubble. Company directors temporarily helped to sustain intermediation in 1720 itself. Whereas before and during the Bubble intermediation was largely in the form of brokerage, after the Bubble dealership noticeably began to displace brokerage. |
| Keywords: | South Sea Company; Financial Revolution; social networks, financial intermediation, inventories. |
| JEL: | N23 G13 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:san:cdmawp:1109&r=net |