nep-net New Economics Papers
on Network Economics
Issue of 2012‒11‒17
ten papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Network Structure and the Aggregation of Information: Theory and Evidence from Indonesia By Alatas, Vivi; Banerjee, Abhijit; Chandrasekhar, Arun G.; Hanna, Rema; Olken, Benjamin A.
  2. Network Broadening and Reinforcing for Facilitating Innovation: Value creation networks in the Japanese music industry (Japanese) By INOUE Tatsuhiko; NAGAYAMA Susumu
  3. Opinion Dynamics under Conformity By Berno Buechel; Tim Hellmann; Stefan Kloessner
  4. Competition in Multi-Modal Transport Networks: A Dynamic Approach By Adriaan Hendrik van der Weijde; Erik T. Verhoef; Vincent van den Berg
  5. Ordered Weighted Averaging in Social Networks By Manuel Förster; Michel Grabisch; Agnieszka Rusinowska
  6. Using Collective Adaptive Networks to Solve Education Problems in Poor Countries By Lynn Ilon; Jorn Altmann
  7. Social networks and the process of "globalization" By Dürnecker, Georg; Vega-Redondo, Fernando
  8. The Role of Network Governance Models in the Design of Local eHealth Policies. By Valentina Albano
  9. Out of sight, not out of mind. Education networks and international trade By Marina Murat
  10. Nuovi strumenti di sviluppo locale: l’effetto delle infrastrutture digitali sulla creazione di lavoro autonomo. Analisi di un caso applicato nello stato di New York By Lucia Bazzucchi

  1. By: Alatas, Vivi (World Bank); Banerjee, Abhijit (MIT); Chandrasekhar, Arun G. (Microsoft Research New England); Hanna, Rema (Harvard University); Olken, Benjamin A. (MIT)
    Abstract: We use a unique data-set from Indonesia on what individuals know about the income distribution in their village to test theories such as Jackson and Rogers (2007) that link information aggregation in networks to the structure of the network. The observed patterns are consistent with a basic diffusion model: more central individuals are better informed, and individuals are able to better evaluate the poverty status of those to whom they are more socially proximate. To understand what the theory predicts for cross-village patterns, we estimate a simple diffusion model using within-village variation, simulate network-level diffusion under this model for the over 600 different networks in our data, and use this simulated data to gauge what the simple diffusion model predicts for the cross-village relationship between information diffusion and network characteristics (e.g. clustering, density). The coefficients in these simulated regressions are generally consistent with relationships suggested in previous theoretical work, even though in our setting formal analytical predictions have not been derived. We then show that the qualitative predictions from the simulated model largely match the actual data in the sense that we obtain similar results both when the dependent variable is an empirical measure of the accuracy of a village's aggregate information and when it is the simulation outcome. Finally, we consider a real-world application to community based targeting, where villagers chose which households should receive an anti-poverty program, and show that networks with better diffusive properties (as predicted by our model) differentially benefit from community based targeting policies.
    JEL: D83 D85
    Date: 2012–10
  2. By: INOUE Tatsuhiko; NAGAYAMA Susumu
    Abstract: This study shows empirical research regarding the value creation network as it relates to facilitating product innovation. What kind of influence does "network broadening" with new players or "network reinforcing" with existing players have on value creation and innovation generation? Furthermore, what kind of environmental change causes network reinforcing and network broadening? This paper attempts a network analysis of the Japanese music industry; a case considered to be at the forefront even in the contents industry, which has been receiving attention in recent years from movements such as the Cool Japan policy. We gave particular attention to the value creation network consisting of multiple players, each of whom possesses varying business models. Due to the differences in the method of revenue generation, it is predicted that, given the environmental uncertainty, relationship building would vary. The result shows that because of factors such as the differences in business models between music production related factors and the investment related factors in shared copyright, there are contrasting relationship building patterns in a context of environmental uncertainty. In addition, the study indicates that product innovation is stimulated through network broadening by the production related factors and that value creation is prompted by network reinforcing of investment related factors.
    Date: 2012–11
  3. By: Berno Buechel (University of Hamburg); Tim Hellmann (Institute of Mathematical Economics); Stefan Kloessner (Saarland University)
    Abstract: We present a model of opinion formation where individuals repeatedly engage in discussion and update their opinion in a social network similarly to the DeGroot model. Abstracting from the standard assumption that individuals always report their opinion truthfully, agents in our model interact strategically in the discussion such that their stated opinion can dier from their true opinion. The incentive to do so is induced by agents' preferences for conformity. Highly conforming agents will state an opinion which is close to their neighbors' while agents with low level of conformity may be honest or even overstate their opinion. We model opinion formation as a dynamic process and identify conditions for convergence to consensus. Studying the consensus in detail, we show that an agent's social in uence on the consensus opinion is increasing in network centrality and decreasing in the level of conformity. Thus, lower conformity fosters opinion leadership. Moreover, assuming that the initial opinion is a noisy signal about some true state of the world, we consider the mean squared error of the consensus as an estimator for the true state of the world. We show that a society is \wise", i.e. the mean squared error is smaller, if players who are well informed are less conform, while uninformed players conform more with their neighbors.
    Date: 2012–07
  4. By: Adriaan Hendrik van der Weijde (VU University Amsterdam); Erik T. Verhoef (VU University Amsterdam); Vincent van den Berg (VU University Amsterdam)
    Abstract: We analyse the behaviour of market participants in a multi-modal commuter network where roads are not priced, but public transport has a usage fee, which is set while taking the effects on the roads into account. In particular, we analyse the difference between markets with a monopolistic public transport operator, which operates all public transport links, and markets in which separate operators own each public transport link. To do so, we consider a simple transport network consisting of two serial segments and two parallel congestible modes of transport. We obtain a reduced form of the public transport operator's optimal fare setting problem and show that, even if the total travel demand is inelastic, serial Bertrand-Nash competition on the public transport links leads to different fares than a serial monopoly; a result not observed in a static model. This results from the fact that trip timing decisions, and therefore the generalized prices of all commuters, are influenced by all fares in the network. We then use numerical simulations to show that, contrary to the results obtained in classic studies on vertical competition, monopolistic fares are not always higher than duopolistic fares; the opposite can also occur. We also explore how different parameters influence the price differential, and how this affects welfare.
    Keywords: Public transport; congestion; market structure; market design
    JEL: L10 L92 R41 R48
    Date: 2012–11–01
  5. By: Manuel Förster (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne, CORE - Université Catholique de Louvain); Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: We study a stochastic model of influence where agents have yes-no inclinations on some issue, and opinions may change due to mutual influence among the agents. Each agent independently aggregates the opinions of the other agents and possibly herself. We study influence processes modelled by ordered weighted averaging operators. This allows to study situations where the influence process resembles a majority vote, which are not covered by the classical approach of weighted averaging aggregation. We provide an analysis of the speed of convergence and the probabilities of absoption by different terminal classes. We find a necessary and sufficient condition for convergence to consensus and characterize terminal states. Our results can also be used to understand more general situations, where ordered weighted averaging operators are only used to some extend. Furthermore, we apply our results to fuzzy linguistic quantifiers.
    Keywords: Social network; influence; convergence; speed of convergence; consensus; ordered weighted averaging operator; fuzzy linguistic quantifier.
    Date: 2012–08
  6. By: Lynn Ilon (College of Education, Seoul National University); Jorn Altmann (Technology Management, Economics, and Management Program, Industrial Engineering, College of Engineering, Seoul National University)
    Abstract: Can education problems in poor countries be successfully addressed using knowledge economics? The old development model posits that poor countries must follow the route of richer countries, progressing up a scale of development. But an emerging theory of development and collective adaptive applications applied to new learning theory suggests new possibilities. This paper outlines a pilot project underway in Zambia. The idea is based on a global network, which supports collective adaptive knowledge construction and local learning, representing a substantial deviation from standard foreign aid. Using the small pilot school in Zambia local knowledge is gathered and combined with global knowledge, to generate content that has, heretofore, been unavailable on the Web. This approach is fundamentally different from e-learning, which delivered lectures from afar. It builds a knowledge base that is relevant to poor countries, enabling them to advance their local economy.
    Keywords: Knowledge Economics, Development Aid, Learning Concept, African Pilot Project, Locally Relevant Education, Community Knowledge.
    JEL: A31 C80 D02 D83 I21 I23 Q01 R58
    Date: 2012–06
  7. By: Dürnecker, Georg; Vega-Redondo, Fernando
    Abstract: We propose a stylised dynamic model to understand the role of social networks in the phenomenon we call "globalization." This term refers to the process by which even agents who are geographically far apart come to interact, thus being able to overcome what would otherwise be a fast saturation of local opportunities. A key feature of our model is that the social network is the main channel through which agents exploit new opportunities. Therefore, only if the social network becomes global (heuristically, it "reaches far in few steps") can global interaction be steadily sustained. To shed light on the conditions under which such a transformation may, or may not, take place is the main objective of the paper. One of the main insights arising from the model is that, in order for the social network to turn global, the economy needs to display a degree of "geographical cohesion" that is neither too high (for then global opportunities simply do not arise) nor too low (then the meeting mechanism displays too little structure for the process to take off). But if globalization does materialize, we show that it is a robust state of affairs that often arises abruptly as key parameters change. This occurs, in particular, as the rate of arrival of ideas rises, or when there is a high enough increase in the range at which the network transmits information.
    Keywords: Social networks , Globalization , Search , Cooperation , Social Cohesion , Innovation
    JEL: D83 D85 C73 O17 O43
    Date: 2012
  8. By: Valentina Albano (Faculty of Economics “Federico Caffè”, University of Rome III)
    Abstract: This paper aims at contributing to the rich debate over the obstacles to the diffusion of eHealth technologies by investigating the role of the institutional setting on the success or failure of an IT diffusion policy. This work focuses on the policy network perspective and it is based on the expectation that the internal characteristics of the policy network influence the policy design. The main goal of this paper is to investigate how eHealth policy networks operate and to determine whether a more effective network governance configuration exists that could improve the design and deployment of successful eHealth projects. This work presents a case study of three eHealth policy networks (Region-governed network, eHealth Local Board-governed network, and a Local Health Agencies’ Consortium-governed network). The focus of this investigation is on how the three models of network governance operate and influence the design of strategies to face five main eHealth challenges identified by scholars and practitioners: financial challenges; IT challenges; change management challenges; institutional challenges and sharing best practices and evaluation tools.
    Keywords: Policy design, Policy network, Network governance, eHealth.
    Date: 2012
  9. By: Marina Murat
    Abstract: This paper investigates the impact of international students on the UK bilateral trade with 167 partner economies during 1999-2009. The base hypothesis is that transnational social networks lower the invisible trade barriers existing between countries. University students typically develop ties of friendship and trust that can last for decades after graduation and may evolve into economic and business ties. I find robust evidence that education networks boost the bilateral trade between the UK and the home countries of graduates and students. At a more disaggregated level, the strongest effects on exports and imports derive from the networks linked to the Middle East and to the new member countries of the European Union.
    Keywords: international students, higher education, networks, bilateral trade;
    JEL: I23 J24 F14 F20
    Date: 2012–11
  10. By: Lucia Bazzucchi (Università di Ferrara)
    Abstract: The aim of this paper is to analyze the way broadband network externalities affect local development, through the creation of new jobs. In particular, I look at network effects that positively influence the creation of self-employment opportunities for people who are active on the job market. Self-employment and entrepreneurship are seen by the literature as drivers of sustainable economic growth. From a microeconomic perspective, they are the result of individual capacities in reacting to economic disequilibrium; therefore, people who are endowed with entrepreneurial abilities would take advantage of exogenous changes. Broadband and the Internet have completely changed the way work is done in many sectors: they have substantially lowered transaction costs and reduced the minimum efficiency scale of production. Also, they lower coordination costs and the risks of entering new markets. By looking at the effects of digital environment on self-employment rates in New York State counties, the paper disentangles the relationship between two important aspects of the contemporary public policy debate: policies to recover from the economic crisis and create new jobs and policies that try to increase broadband availability and affordability within local communities.
    Keywords: broadband, network externalities, self-employment, public policy
    JEL: H4 H7 L26
    Date: 2012–11

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