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on Network Economics |
| By: | Filistrucchi, L.; Klein, T.J.; Michielsen, T.O. (Tilburg University, Center for Economic Research) |
| Abstract: | We compare different methods to assess unilateral merger effects in a two-sided market by applying them to a hypothetical merger in the Dutch newspaper industry. For this, we first specify and estimate a structural model of demand for differentiated products on both the readership and the advertising side of the market. This allows us to recover price elasticities and indirect network effects. Following Filistrucchi, Klein, and Michielsen (2010) marginal costs are then recovered from an oligopoly model of the supply side. We use these estimates of price elasticities, network effects and marginal costs to compare different methods that can be used to evaluate merger effects: We perform a concentration analysis based on the Herfindahl Hirschmann Index, a Small Significant Non-Transitory Increase in Price test, measure Upward Pricing Pressure, and conduct a full merger simulation. |
| Keywords: | Two-sided markets;newspapers;advertising;network effects;merger simulation;SSNIP;UPP;HHI. |
| JEL: | L13 L40 L82 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2011114&r=net |
| By: | Hanna Halaburda (Strategy Unit, Harvard University); Yaron Yehezkel (The Recanati Graduate School of Business Administration, Tel Aviv University) |
| Abstract: | In the context of platform competition in a two-sided market, we study how ex-ante uncertainty and ex-post asymmetric information concerning the value of a new technology affects the strategies of the platforms and the market outcome. We find that the incumbent dominates the market by setting the welfare-maximizing quantity when the difference in the degree of asymmetric information between buyers and sellers is significant. However, if this difference is below a certain threshold, then even the incumbent platform will distort its quantity downward. Since a monopoly incumbent would set the welfare-maximizing quantity, this result indicates that platform competition may lead to a market failure: Competition results in a lower quantity and lower welfare than a monopoly. We consider two applications of the model. First, we consider multi-homing. We find that multi-homing solves the market failure resulting from asymmetric information. However, if platforms can impose exclusive dealing, then they will do so, which result in market inefficiency. Second, the model provides a new argument for why it is usually entrants, not incumbents, that bring major technological innovations to the market. |
| Keywords: | asymmetric information, platform competition, exclusive dealing, technology adoption |
| JEL: | L15 L41 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1105&r=net |
| By: | Villanueva-Felez, Africa; Molas-Gallart, Jordi |
| Abstract: | This paper shows that the features that characterize the exchange of information among individuals vary depending on the type of information exchanged (novel or specific) and the institutional affiliation of the individuals involved. It unbundles the concept of strong and weak links into three main tie characteristics: trust, friendship and reciprocity. Using data from a survey of nanotechnology researchers, we identify the characteristics of 594 links between researchers and individuals from different institutional groups (firms, governmental organizations and universities). Findings suggest behavioral regularities that are contingent on the kind of information being exchanged and the contact?s institutional membership. For, instance, when university researchers exchange novel information between themselves, the level of trust becomes essential, but exchanges with individuals from other institutional settings (firms and governmental organizations) will be characterized instead by reciprocity and friendship. We discuss the implications of these findings for research on the relational perspective of social networks and university-society relationships. |
| Keywords: | Knowledge transfer; tie strength; institutional affiliation; nanotechnology |
| JEL: | L14 O17 O31 O32 |
| Date: | 2011–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:ing:wpaper:201109&r=net |
| By: | Villanueva-Felez, Africa; Molas-Gallart, Jordi; Escribá Esteve, Alejandro |
| Abstract: | The analysis of social networks has remained a crucial and yet understudied aspect of the efforts to measure Triple Helix linkages. The Triple Helix model aims to explain, among other aspects of knowledge-based societies, ?the current research system in its social context? (Etzkowitz & Leydesdorff, 2000:109). This paper develops a novel approach to study the research system from the perspective of the individual, through the analysis of the relationships among researchers, and between them and other social factors. We develop a new set of techniques and show how they can be applied to the study of a specific case (a group of academics within a university department). We analyse their informal social networks and show how a relationship exists between the characteristics of an individual?s network of social links and his or her research output. |
| Keywords: | embeddedness; academic network; research output |
| JEL: | L14 O17 O31 O32 |
| Date: | 2011–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:ing:wpaper:201111&r=net |
| By: | Marco Duenas; Giorgio Fagiolo |
| Abstract: | This paper investigates whether the gravity model (GM) can explain the statistical properties of the International Trade Network (ITN). We fit data on international-trade flows with a GM specification using alternative fitting techniques and we employ GM estimates to build a weighted predicted ITN, whose topological properties are compared to observed ones. Furthermore, we propose an estimation strategy to predict the binary ITN with a GM. We find that the GM successfully replicates the weighted-network structure of the ITN, only if one fixes its binary architecture equal to the observed one. Conversely, the GM performs very badly when asked to predict the presence of a link, or the level of the trade flow it carries, whenever the binary structure must be simultaneously estimated. |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1112.2867&r=net |
| By: | Ezra Oberfield |
| Abstract: | This paper studies an analytically tractable model of the formation and evolution of chains of production. Over time, entrepreneurs accumulate techniques to produce their good using goods produced by other entrepreneurs and labor as inputs. The value of a technique depends on both the productivity embodied in the technique and the cost of the particular input; when producing, each entrepreneur selects the technique that delivers the best combination. The collection of known production techniques form a dynamic network of potential chains of production: the input-output architecture of the economy. Aggregate productivity depends on whether the lower cost firms are the important suppliers of inputs. When the share of intermediate goods in production is high, the lower cost firms are selected as suppliers more frequently. This raises aggregate productivity and also increases the concentration of sales of intermediate goods. |
| Keywords: | Productivity ; Labor market |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-2011-12&r=net |
| By: | Roi Zultan (Department of Economics, Ben-Gurion University of the Negev, Beer-Sheva 84105, Israel) |
| Abstract: | Pre-play face-to-face communication is known to facilitate cooperation. Various explanations exist for this effect, varying in their dependence on the strategic content of the communication. Previous studies have found similar communication effects regardless of whether strategic communication is available. These results were so far taken to support a social-preferences based explanation of the communication effects. The current experiment provides a replication and extension of previous results to show that different processes come into play, depending on the communication protocol. Specically, pre-play communication in an ultimatum game was either restricted to nongame- related content or unrestricted. The results show that strategic, but not social, communication affects responders' strategies. Thus, the existing results are cast in a new light. I conclude that pre-play communication effects may be mediated by qualitatively dierent processes, depending on the social context. |
| JEL: | C90 Z13 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:bgu:wpaper:1107&r=net |
| By: | Julian C. Jamison |
| Abstract: | In economic situations a player often has preferences regarding not only his or her own outcome but also regarding what happens to fellow players, concerns that are entirely apart from any strategic considerations. While this can be modeled directly by simply writing down a player's final preferences, these are commonly unknown a priori. In many cases it is therefore both helpful and instructive to explicitly model these interactions. This paper, building on a model due to Bergstrom (1989, 1999), presents a simple structure in the context of game theory that incorporates the "synergies" between players. It is powerful enough to cover a wide range of such interactions and model many disparate experimental and empirical results, yet it is straightforward enough to be used in many applied situations where altruism, or a baser motive, is implied. |
| Keywords: | Human behavior ; Game theory ; Altruism |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:11-15&r=net |
| By: | Todd R. Kaplan (Department of Economics, University of Haifa, Israel.); Bradley J. Ruffle Author-X-Name-Bradley J. (Department of Economics, Ben-Gurion University, Beer Sheva, Israel.) |
| Abstract: | We introduce a two-player, binary-choice game in which both players have a privately known incentive to enter, yet the combined surplus is highest if only one enters. Repetition of this game admits two distinct ways to cooperate: turn taking and cutoffs, which rely on the player’s private value to entry. A series of experiments highlights the role of private information in determining which mode players adopt. If an individual’s entry values vary little (e.g., mundane tasks), taking turns is likely; if these potential values are diverse (e.g., difficult tasks that differentiate individuals by skill or preferences), cutoff cooperation emerges. |
| JEL: | C90 Z13 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:bgu:wpaper:1105&r=net |