nep-net New Economics Papers
on Network Economics
Issue of 2012‒05‒08
four papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. How Do Aggregate Fluctuations Depend on the Network Structure of the Economy? By Lorenzo Burlon
  2. Congestion management in electricity networks: Nodal, zonal and discriminatory pricing By Holmberg, P.; Lazarczyk, E.
  3. A coalition formation value for games in partition function form By Michel Grabisch; Yukihiko Funaki
  4. Peer Effects and Social Preferences in Voluntary Cooperation By Christian Thoeni; Simon Gaechter

  1. By: Lorenzo Burlon (Universitat de Barcelona)
    Abstract: In this paper we analyze the aggregate volatility of a stylized economy where agents are networked. If strategic relations connect agents,actions, idiosyncratic shocks can generate nontrivial aggregate fluctuations. We show that the aggregate volatility depends on the network structure of the economy in two ways. On the one hand, the more connected the economy, the lower the aggregate volatility. On the other hand, the more concentrated the network, the higher the aggregate volatility. We provide an application of our theoretical predictions using US data on intersectoral linkages and firms diversification patterns.
    Keywords: aggregate fluctuations, firms, intersectoral linkages, networks
    JEL: C67 E32 D57
    Date: 2012
  2. By: Holmberg, P.; Lazarczyk, E.
    Abstract: Wholesale electricity markets use different market designs to handle congestion in the transmission network. We compare nodal, zonal and discriminatory pricing in general networks with transmission constraints and loop flows. We conclude that in large games with many producers who are allowed to participate in the real-time market the three market designs result in the same efficient dispatch. However, zonal pricing with counter-trading results in additional payments to producers in exportconstrained nodes.
    Keywords: Congestion management, wholesale electricity market, transmission network, nodal pricing, zonal pricing with countertrading, discriminatory pricing, large game
    JEL: C72 D44 D61 L13 L94
    Date: 2012–04–25
  3. By: Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne); Yukihiko Funaki (School of political science and economics, Waseda University - Waseda University)
    Abstract: The coalition formation problem in an economy with externalities can be adequately modeled by using games in partition function form (PFF games), proposed by Thrall and Lucas. If we suppose that forming the grand coalition generates the largest total surplus, a central question is how to allocate the worth of the grand coalition to each player, i.e., how to find an adequate solution concept, taking into account the whole process of coalition formation. We propose in this paper the original concepts of scenario-value, process-value and coalition formation value, which represent the average contribution of players in a scenario (a particular sequence of coalitions within a given coalition formation process), in a process (a sequence of partitions of the society), and in the whole (all processes being taken into account), respectively. We give also two axiomatizations of our coalition formation value.
    Keywords: game theory; coalition formation; games in partition function form; Shapley value
    Date: 2012
  4. By: Christian Thoeni (University of St.Gallen); Simon Gaechter (University of Nottingham)
    Abstract: Substantial evidence suggests the behavioral relevance of social preferences and also the importance of social influence effects (“peer effects”). Yet, little is known about how peer effects and social preferences are related. In a three-person gift-exchange experiment we find causal evidence for peer effects in voluntary cooperation: agents’ efforts are positively related despite the absence of material payoff interdependencies. We confront this result with major theories of social preferences which predict that efforts are unrelated, or negatively related. Some theories allow for positively-related efforts but cannot explain most observations. Conformism, norm following and considerations of social esteem are candidate explanations.
    Keywords: social preferences, voluntary cooperation, peer effects, reflection problem, gift-exchange; conformism; social norms; social esteem
    JEL: C92 D03
    Date: 2011–09

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