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on Network Economics |
| By: | Pauline Affeldt; Lapo Filistrucchi (Università degli Studi di Firenze,); Tobias J. Klein |
| Abstract: | Pricing pressure indices have recently been proposed as alternative screening devices for horizontal mergers involving differentiated products. We extend the concept of Upward Pricing Pressure (UPP) proposed by Farrell and Shapiro (2010) to two-sided markets. Examples of such markets are the newspaper market, where the demand for advertising is related to the number of readers, and the market for online search, where advertising demand depends on the number of users. The formulas we derive are useful for screening mergers among two-sided platforms. Due to the two-sidedness they depend on four sets of diversion ratios that can either be estimated using market-level demand data or elicited in surveys. In an application, we evaluate a hypothetical merger in the Dutch daily newspaper market. Our results indicate that it is important to take the two-sidedness of the market into account when evaluating UPP. |
| Keywords: | Merger evaluation, two-sided markets, network effects, UPP. |
| JEL: | L13 L40 L82 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2012_15.rdf&r=net |
| By: | Bhaskar DasGupta; Lakshmi Kaligounder |
| Abstract: | Involvements of major financial institutions in the recent financial crisis have generated renewed interests in fragility of global financial networks among economists and regulatory authorities. In particular, one potential vulnerability of the financial networks is the "financial contagion" process in which insolvencies of individual entities propagate through the "web of dependencies" to affect the entire system. In this paper, we formalize a banking network model originally proposed by researchers from Bank of England and elsewhere that may be applicable to scenarios such as the OTC derivatives market, define a global stability measure for this model, and comprehensively evaluate the stability measure over more than 700,000 combinations of networks types and parameter combinations. Based on such comprehensive evaluations, we discuss some interesting implications of our evaluations of this stability measure, and derive topological properties and parameters combinations that may be used to flag the network as a possible fragile network. |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1208.3789&r=net |
| By: | Giuseppe D'ACQUISTO (Garante per la protezione dei dati personali - Garante per la protezione dei dati personali); Patrick MAILLÉ (RSM - Département Réseaux, Sécurité et Multimédia - Institut Télécom - Télécom Bretagne - Université européenne de Bretagne); Maurizio Naldi (DISP - Dipartimento di Informatica, Sistemi e Produzione [Roma] - Università degli Studi di Roma "Tor Vergata"); Bruno Tuffin (INRIA - IRISA - DIONYSOS - INRIA - Université de Rennes 1) |
| Abstract: | The impact of wholesale prices is examined in a context where the end customer access both free content and payper-use content, delivered by two different providers through a common network provider. We formulate and solve the game between the network provider and the pay-per-use content provider, where both use the price they separately charge the end customer with as a leverage to maximize their profits. In the neutral case (the network provider charges equal wholesale prices to the two content providers), the benefits coming from wholesale price reductions are largely retained by the pay-peruse content provider. When the free content provider is charged more than its pay-per-use competitor, both the network provider and the pay-per-use content provider see their profit increase, while the end customer experiences a negligible reduction in the retail price. |
| Keywords: | Network neutrality, Game theory, Pricing |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00725050&r=net |
| By: | Vladimir FUX (RSM - Département Réseaux, Sécurité et Multimédia - Institut Télécom - Télécom Bretagne - Université européenne de Bretagne); Patrick MAILLÉ (RSM - Département Réseaux, Sécurité et Multimédia - Institut Télécom - Télécom Bretagne - Université européenne de Bretagne) |
| Abstract: | During the last years the problem of network selection in wireless heterogeneous systems has attracted a lot of attention. Expecting that next generation mobile devices will allow connections to different types of networks, it is interesting to investigate the outcome of selfish behavior in that context. It may then be necessary to introduce some mechanisms to drive users choices to some desirable directions - quality of service (QoS) optimization, energy consumption minimization, network revenue maximization -. In this paper, we define and investigate a system where users decide which network to connect to based on some ratings of networks, possibly computed from feedback sent by other users. We then apply that model to investigate the pricing decisions made by network owners, in two different settings: a compe- tition among several revenue-oriented operators, or a revenue- maximizing monopoly. The outcomes of those settings are com- pared, in terms of network usage and energy consumption. |
| Keywords: | Network selection, Game theory, Congestion control, Quality of service |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00725032&r=net |
| By: | Church, Jeffrey; Gandal, Neil |
| Abstract: | Clements (2004) makes the following two claims: (i) unlike direct network effects, increases in the size of the market do not, in the case of indirect network effects, make standardization more likely, but (ii) indirect network effects are associated with excessive standardization. We show in Clements’ framework that neither of these results are correct: standardization is more likely as the number of software firms increases and when the type of market equilibrium is unique— there are only multiple networks or only standardization—there is never excessive standardization, but there could be insufficient standardization, just as is the case with direct network effects. |
| Keywords: | network effects; standardization |
| JEL: | D43 L1 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9097&r=net |
| By: | Stuart McDonald (School of Economics, The University of Queensland); Mohamad Alghamdi; Bernard Pailthorpe |
| Abstract: | Using a data set spanning the period 1899-2000, we construct a network of RJVs and track the pattern of growth of this network over time. The resulting R&D network is emergent in the sense that RJVs are contained within it, connected to other RJVs by the existence firms sharing membership with multiple RJVs. This paper shows that the largest growth in the R&D networks occurred during the last three decades of the Twentieth Century. During this growth period, the R&D network has a pattern of collaboration that can be characterized as having the “small world†property. This has implications for the rate of information diffusion across the network, as it implies that many non-collaborating firms are in fact quite close to each other in terms of degree of separation. We show that this network structure is due to the presence of a small number of highly connected firms that collaborate across multiple RJVs. These firms have an important characteristic in that without their presence in the network, the R&D network looses its cohesiveness and the small world property disappears. Hence, these highly connected firms have an important role to play in determining the overall robustness of the R&D network. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uq2004:469&r=net |
| By: | François Boussion (ENS - Ecole Normale Supérieure - Ministère chargé de l'enseignement supérieur.); Patrick MAILLÉ (RSM - Département Réseaux, Sécurité et Multimédia - Institut Télécom - Télécom Bretagne - Université européenne de Bretagne); Bruno Tuffin (INRIA - IRISA - DIONYSOS - INRIA - Université de Rennes 1) |
| Abstract: | Network neutrality has recently been the topic of an important debate, in both the telecommunication and political worlds, because of its potential impact in every-day life. While there has been many studies discussing the advantages and drawbacks of neutrality, there is no game-theoretical study dealing with the observable situation of competitive ISPs in front of a (quasi-)monopolistic content provider (CP), while it is a complaint from ISPs, and an illustration of the non-neutrality need. This paper provides a first game-theoretical analysis of relations between two competitive ISPs and a single CP, in the form of a four-level game, played at different time scales. This game is analyzed by backward induction. We show that while the complaint from ISPs is relevant with a such a competitive model, inserting side payments does not solve the problem. |
| Keywords: | Network neutrality, Competition, Pricing, Game theory |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00725489&r=net |
| By: | Michele Belot (University of Oxford); Marcel Fafchamps (University of Oxford) |
| Abstract: | Some evidence suggests that people behave more pro-socially in small groups than in market-like situations. We construct an experiment in which people choose between allocations that affect their payoff and that of others. The choices of some participants are randomly selected to determine payoffs. We test whether people exhibit different other-regarding preferences depending on how the choice is framed. To mimic a market-like environment, we ask subjects to select a type of partner, either high or low. Selecting a partner of a given type effectively removes this pairing from other players. We compare this treatment to two alternatives where people are first assigned to groups of two high and two low participants. In one treatment, they are then asked to choose between a high and low partner. In the other, they are asked to choose between two payoff allocations for the four individuals. These two treatments make the implication of one's choice on others more salient. We find that most subjects pursue their self-interest, but high payoff participants behave more altruistically in small groups while low payoff participants display more invidious choices in the market-like environment. The implication is that while some efficiency can be achieved in small groups thanks to altruism, a market-like environment reduces good samaritan tendencies, possibly because the negative effect of one's choice on others is less salient. |
| Keywords: | Behavioral experiment, Social preferences, Partnership formation |
| JEL: | C90 D63 D64 Z13 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:cex:dpaper:2012001&r=net |