nep-net New Economics Papers
on Network Economics
Issue of 2011‒08‒29
eight papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Economic Institutions and Stability: A Network Approach By Gilles, R.P.; Lazarova, E.A.; Ruys, P.H.M.
  2. Farsightedly Stable FTA Structures By Noritsugu Nakanishi
  3. The empirical content of models with multiple equilibria in economies with social interactions By Alberto Bisin; Andrea Moro; Giorgio Topa
  4. Economies of Scale and Scope in Network Industries: Lessons for the UK water and sewerage sectors By Pollitt, M. J.; Steer, S. J.
  5. Ownership Unbundling of Gas Transmission Networks - Empirical Evidence By Growitsch, Christian; Stronzik, Marcus
  6. Fibre Access: Network Developments in the OECD Area By OECD
  7. The Impact of Funding on Research Collaboration: Evidence from Argentina By Diego Ubfal; Alessandro Maffioli
  8. Coalitional Bargaining Equilibria By John Duggan

  1. By: Gilles, R.P.; Lazarova, E.A.; Ruys, P.H.M. (Tilburg University, Center for Economic Research)
    Abstract: We consider a network economy in which economic agents are connected within a structure of value-generating relationships. Agents are assumed to be able to participate in three types of economic activities: autarkic self-provision; binary matching interactions; and multi-person cooperative collaborations. We introduce two concepts of stability and provide sufficient and necessary conditions on the prevailing network structure for the existence of stable assignments, both in the absence of externalities from cooperation as well as in the presence of size-based externalities. We show that institutional elements such as the emergence of socioeconomic roles and organizations based on hierarchical leadership structures are necessary for establishing stability and as such support and promote stable economic development.
    Keywords: Cooperatives;Networks;Clubs;Network economies;Stable matchings.
    JEL: C72 D71 D85
    Date: 2011
  2. By: Noritsugu Nakanishi (Graduate School of Economics, Kobe University)
    Abstract: Taking account of the farsightedness of the countries and adopting the von Neumann-Morgenstern (vNM) stable set as the solution concept, we examine an FTA network formation game. FTA networks are represented by undirected graphs with their vertex sets being identified with the set of the countries. Each countryfs welfare depends upon the shape of the graph and its location in that graph. We examine two extreme cases: one in which the pre-agreement taris are very high and the other in which they are su- ciently low. In the former, the farsighted vNM stable set only supports global free trade, implying that bilateral FTAs are building blocks for achieving global free trade. In the latter, the farsighted vNM stable set does not support global free trade, instead it supports some inecient FTA networks, implying that bilateral FTAs are stumbling blocks against achieving global free trade.
    Date: 2011–08
  3. By: Alberto Bisin; Andrea Moro; Giorgio Topa
    Abstract: We study a general class of models with social interactions that might display multiple equilibria. We propose an estimation procedure for these models and evaluate its efficiency and computational feasibility relative to different approaches taken to the curse of dimensionality implied by the multiplicity. Using data on smoking among teenagers, we implement the proposed estimation procedure to understand how group interactions affect health-related choices. We find that interaction effects are strong both at the school level and at the smaller friends-network level. Multiplicity of equilibria is pervasive at the estimated parameter values, and equilibrium selection accounts for about 15 percent of the observed smoking behavior. Counterfactuals show that student interactions, surprisingly, reduce smoking by approximately 70 percent with respect to the equilibrium smoking that would occur without interactions.
    Keywords: Human behavior ; Social choice ; Health
    Date: 2011
  4. By: Pollitt, M. J.; Steer, S. J.
    Abstract: Many studies of the water and sewerage industries place significant importance on the benefits of economies of scale and scope and how these relate to vertically integrated firms. We have re-examined the early literature on scale and scope economies and find that these studies do not implicitly preclude non-integrated firms from fully utilising assets for multi-product activities; they can still reap scope economies through trading in the open market. Further, we demonstrate difficulties in separating these two types of economies when assessing firm performance. Trade-offs between governance and production costs are a key issue in determining the value of vertically integrated firms that may undergo divestiture. We discuss the present policy debate regarding the optimal structure of the water and sewerage markets in England and Wales in the light of this, and recommend avenues of research that will help determine the optimal policy.
    JEL: L95
    Date: 2011–08–17
  5. By: Growitsch, Christian (Energiewirtschaftliches Institut an der Universitaet zu Koeln); Stronzik, Marcus (Energiewirtschaftliches Institut an der Universitaet zu Koeln)
    Abstract: The European Commission has intensively discussed the mandatory separation of natural gas transmission from production and services. However, economic theory is ambiguous on the price effects of vertical separation. In this paper, we empirically analyse the effect of ownership unbundling of gas transmission networks as the strongest form of vertical separation on the level of end-user prices. <p> Therefore, we apply different dynamic estimators as system GMM and the bias-corrected least-squares dummy variable or LSDVC estimator on an unbalanced panel out of 18 EU countries over 19 years, allowing us to avoid the endogeneity problem and to estimate the long-run effects of regulation. <p> We introduce a set of regulatory indicators as market entry regulation, ownership structure, vertical separation and market structure and account for structural and economic country specifics. Among these different estimators, we consistently find that ownership unbundling has no impact on natural gas end-user prices, while the more modest legal unbundling reduces them significantly. Furthermore, third-party access, market structure and privatisation show significant influence with the latter leading to higher price levels.
    Keywords: Natural gas; Networks; Regulation; Ownership unbundling; Panel data
    JEL: C23 L43 L94
    Date: 2011–07–20
  6. By: OECD
    Abstract: This report examines recent developments regarding the use of fibre to provide local access networks for the provision of broadband access. Countries across the OECD are adopting different approaches to stimulate investment and to define the terms of competition to end-users in a Fibre to the Home/Building (FTTH/B) world.
    Date: 2011–06–16
  7. By: Diego Ubfal; Alessandro Maffioli
    Abstract: In this paper, we evaluate the impact of research grants on the amount of collaboration, among scientific researchers in Argentina. We find a positive and significant impact of funding on collaboration, which is measured in terms of the number of co-authors for publications in peer-reviewed journals. In particular, we find a significant impact of the grants for funded researchers both on the size of their ego network, and on their 2-step indirect links, measured by the number of direct and 1-step indirect co-authors. We also find evidence that this impact was driven by the results of funded researchers at the upper tail of the distribution of collaboration outcomes.
    Keywords: Public Sector :: Population Statistics & Information Systems, Education, Education :: Higher Education, Science & Technology, Scientific Collaboration; Social Networks; Program Evaluation; Nonparametric Difference-in-Differences Estimator; Latin America; Argentina; Development Effectiveness
    Date: 2010–09
  8. By: John Duggan (W. Allen Wallis Institute of Political Economy, 107 Harkness Hall, University of Rochester, Rochester, NY 14627-0158)
    Abstract: This paper takes up the foundational issue of existence of stationary subgame perfect equi- libria in a general class of coalitional bargaining games that includes many known bargaining models and models of coalition formation. General sufficient conditions for existence of equilib- ria are currently lacking in many interesting environments: bargaining models with non-concave stage utility functions, models with a Pareto optimal status quo alternative and heterogeneous discount factors, and models of coalition formation in public good economies with consumption lower bounds. This paper establishes existence of stationary equilibrium under compactness and continuity conditions, without the structure of convexity or comprehensiveness used in the extant literature. The proof requires a precise selection of voting equilibria following different proposals. The result is applied to obtain equilibria in models of bargaining over taxes, coalition formation in NTU environments, and collective dynamic programming problems.
    Date: 2011–05

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