nep-net New Economics Papers
on Network Economics
Issue of 2011‒11‒28
ten 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. Optimal regulation under unknown supply of distributed generation By Rob Aalbers; Viktoria Kocsis; Victoria Shestalova
  3. Biased diffusion on Japanese inter-firm trading network: Estimation of sales from network structure By Hayafumi Watanabe; Hideki Takayasu; Misako Takayasu
  4. Patterns and effects of entry in US airline markets By Hüschelrath, Kai; Müller, Kathrin
  5. The impact of West-German universities on regional innovation activities: A social network analysis By Meyborg, Mirja
  6. A scale-free transportation network explains the city-size distribution By Berliant, Marcus; Watanabe, Hiroki
  7. Measuring social embeddedness : how to identify social networks in science-industry partnerships ? By Marie Ferru; Michel Grossetti; Marie-Pierre Bès
  8. Doctors' remuneration schemes and hospital competition in two-sided markets with common network externalities By Bardey, David; Cremer, Helmuth; Lozachmeur, Jean-Marie
  9. The Old Boy Network: Gender Differences in the Impact of Social Networks on Remuneration in Top Executive Jobs By Lalanne, Marie; Seabright, Paul

  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 offering 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: Rob Aalbers; Viktoria Kocsis; Victoria Shestalova
    Abstract: <p>As distributed generation (DG) continues to expand, larger low-voltage networks will be required in the future. However, regulated distribution network operators (DNOs) need to invest in new infrastructure without knowing a relevant determinant of network costs, the future amount of DG.</p><p>Due to uncertainty, optimal network capacity needs to reflect the expected demand for capacity over all possible DG states. Therefore, not all capacity will be used if a low level of DG occurs. Optimal regulation that is set under asymmetric information about future DG needs to create incentives for the DNO to invest in this 'excess capacity' and also encourage optimal network utilization. In this case, an option menu that includes fixed fees and positive network charges on DG-producers fulfills these requirements and implements the first-best optimum. On the contrary, price-cap and revenue-cap regulation lead to either underinvestment or high information rents to the DNO.</p>
    JEL: L12 L51 Q42 Q48
    Date: 2011–11
  3. By: Hayafumi Watanabe; Hideki Takayasu; Misako Takayasu
    Abstract: To investigate the actual phenomena of transport on a complex network, we analysed empirical data for an inter-firm trading network, which consists of about one million Japanese firms and the sales of these firms (a sale corresponds to the total in-flow into a node). First, we analysed the relationships between sales and sales of nearest neighbourhoods from which we obtain a simple linear relationship between sales and the weighted sum of sales of nearest neighbourhoods (i.e., customers). In addition, we introduce a simple money transport model that is coherent with this empirical observation. In this model, a firm (i.e., customer) distributes money to its out-edges (suppliers) proportionally to the in-degree of destinations. From intensive numerical simulations, we find that the steady flows derived from these models can approximately reproduce the distribution of sales of actual firms. The sales of individual firms deduced from the money-transport model are shown to be proportional, on an average, to the real sales.
    Date: 2011–11
  4. By: Hüschelrath, Kai; Müller, Kathrin
    Abstract: We use T-100 traffic data and DB1B fare data from the U.S. Department of Transportation to identify patterns and effects of entry by network carriers and low-cost carriers in non-stop U.S. airline markets. For the sample period from 1996 to 2009, we find that entry activity of low-cost carriers did not only experience significant absolute increases but also led to substantial fare reductions. As route entries by network carriers do not have comparable effects, the existence and expansion of low-cost carriers must be considered as the main driver of competition in the domestic U.S. airline industry. --
    Keywords: Airline industry,liberalisation,entry,low-cost carriers
    JEL: L40 L93
    Date: 2011
  5. By: Meyborg, Mirja
    Abstract: In recent years, it has widely been accepted that the ability to create, access and use knowledge and technology is becoming a fundamental determinant of long-term development and competitiveness. Thus, it is not surprising that universities have increasingly become involved in economic development and are often believed to play a key role in regional economic development. This paper firstly examines how far all West-German universities are already involved in close network collaborations. Second, it demonstrates how many distinct linkages 45 chosen West-German universities already possess within the innovation network, and third, to what extent they are already needed as a link in the chains of contacts. Thereby, special attention is given to the eight West-German elite-universities. We basically found out that university interactions, especially university-enterprise networks, become much more important over the last 20 years, as their cooperation activity strongly increased over time. Besides, their distinct linkages to other actors as well as their importance as an intermediary within the innovation network highly increased over the last decade, too; this especially holds for the eight West-German elite universities. --
    Keywords: Human Capital,Economic Growth,Social Network Analysis,Patent Analysis,Patent Collaboration,Network Interaction,West-German University,Elite-University
    Date: 2011
  6. By: Berliant, Marcus; Watanabe, Hiroki
    Abstract: Zipf’s law is one of the best-known empirical regularities of the city-size distribution. There is extensive research on the subject, where each city is treated symmetrically in terms of the cost of transactions with other cities. Recent developments in network theory facilitate the examination of an asymmetric transport network. Under the scale-free transport network framework, the chance of observing extremes becomes higher than the Gaussian distribution predicts and therefore it explains the emergence of large clusters. City-size distributions share the same pattern. This paper proposes a way to incorporate network structure into urban economic models and explains the city-size distribution as a result of transport cost between cities.
    Keywords: Zipf’s law; city-size distribution; scale-free network
    JEL: R40 R12
    Date: 2011–11–17
  7. By: Marie Ferru; Michel Grossetti; Marie-Pierre Bès
    Abstract: Social embeddedness appears to be a promising way to analyze knowledge collaborations, notably to better understand their build up and their spatial patterns. Nevertheless, measurement problems and an over-territorialized conception of the notion exist. When studying the formation of these partnerships, authors have underlined the embeddedness of innovators in social ties as a major factor (Walker, Kogut, 1994 ; Zucker et al., 1998); others have shed light on institutional devices (Ponomariov, Boardman, 2010 ; Eom, Lee, 2010), but few have integrated both relational and institutional forms of embeddedness. Moreover, “embeddedness is mostly conceived of as a spatial concept related to the local and regional levels of analysis†(Hess, 2004): scholars argued (Moka et al., 2007) and showed (Fischer, 1982 ; Wellman, 1996; Grossetti, 2002) that social ties easily build-up in the neighborhood. They thus conclude social embeddedness favors local partnerships without demonstrating it really. Finally at the empirical level, precise data are missing to identify social embeddedness (Giuri, Mariani, 2007). Therefore, regarding the existing studies, “the analytical scales and the spatiality of embeddedness needs to be scrutinized†(Hess, 2004) theoretically and empirically to determine “who is embedded, in what and what is so spatial about it ?†(Pike et al., 2000). We propose here to address this deficit thanks to the formulation of a method robust enough. In this perspective, an analytical framework which does not postulate the social network hegemony is needed. We realized further theoretical refinements by introducing the concept of « coordination resources » to indicate modalities that permit connections between actors without using interpersonal ties. To identify embeddedness effects, we then present an original method essentially based on interviews. We use it to a group of 264 cases of science-industry collaborations realized in France. Several results are revealed thanks to statistical and econometric treatments. We reaffirm the major weigh of social embeddedness in the build-up of partnerships and the complementary role of coordination resources. Social embeddedness appears to be independent from the partners features. It nevertheless impacts the geography of the partnership although it is not possible to associate systematically social embeddedness and local collaborations.
    Date: 2011–09
  8. By: Bardey, David (University of Rosario (Bogota, Colombia) and Toulouse School of Economics); Cremer, Helmuth (Toulouse School of Economics (IDEI and GREMAQ-CNRS)); Lozachmeur, Jean-Marie (Toulouse School of Economics (IDEI and GREMAQ-CNRS))
    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 different intensities, the same network externality. We explicitly introduce e¤ort exerted by doctors. By increasing the number of medical acts (which involves a costly effort) the doctor can increase the quality of service offered to patients (over and above the level implied by the CNE). We fi…rst 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.
    JEL: D41 L11 L12
    Date: 2011–02
  9. By: Lalanne, Marie; Seabright, Paul
    JEL: A14 J16 J31 J33
    Date: 2011–10
  10. By: Nilakshi W.K Galahitiyawe (Faculty of Business & Accountancy, University of Malaya, Kuala Lumpur); Assoc. Prof. Dr. Ghazali Musa
    Abstract: Outsourcing has become a buzz word in strategic management as the competition of modern business is the competition among business networks. The reviews on the measure of outsourcing success are conceptually fragmented due to different theories that have been applied in different studies. The overall aim of this paper is to develop an integrated framework in measuring the performance of services outsourcing. The framework is derived from Social Exchange Theory. Each party responsibility in dyadic relationship over outsourcing success is examined. This is followed by the identification of the mediating effect of compatibility between partners, and moderating effect of partnership quality to the aforementioned relationship. Outsourcing performance is proposed to be evaluated from the perspectives of tactical, strategic and behavioral dimensions
    Keywords: Buyer related factors, Compatibility, Outsourcing, and Partnership quality, Services ,Supplier related factors
    JEL: M0
    Date: 2011–10

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.