nep-net New Economics Papers
on Network Economics
Issue of 2012‒12‒06
eight papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Search engine competition with network externalities. By Argenton, C.; Prüfer, J.
  2. Monopoly R&D and Compatibility Decisions in Network Industries By Jong-Hee Hahn; Jin-Hyuk Kim
  3. Internet Interconnection and Network Neutrality By Choi, Jay; Jeon, Doh-Shin; Kim, Byung-Cheol
  4. Value Creation in IT Service Platforms through Two-Sided Network Effects By Netsanet Haile; Jorn Altmann
  5. Digital Urban Network Connectivity: Global and Chinese Internet Patterns By Emmanouil Tranos; Karima Kourtit; Peter Nijkamp
  6. Strategic interactions and contagion effects under monetary unions By Canofari Paolo; Di Bartolomeo Giovanni; Piersanti Giovanni
  7. Ochrona zasobów niematerialnych w sieciach kooperacyjnych By Najda-Janoszka, Marta
  8. Network analysis of correlation strength between the most developed countries By Janusz Mi\'skiewicz

  1. By: Argenton, C. (Tilburg University); Prüfer, J. (Tilburg University)
    Date: 2012
  2. By: Jong-Hee Hahn (School of Economics, Yonsei University); Jin-Hyuk Kim
    Abstract: In network industries, we often observe frequent upgrades of existing products as well as delayed introductions of new products. In order to explain these contrasting phenomena, this paper examines a durable-good monopolist's incentive for R&D in- vestment in new product development in a market with network effects. We show that if the network effect is strong the monopolist underinvests in R&D compared to the commitment level, whereas overinvestment occurs when the network effect is weak. The monopolist also chooses full intergenerational compatibility between products. We then extend the analysis to the cases of potential entry and successive innovations, and examine how the results change in these extensions.
    Keywords: Planned Obsolescence, Network Effects, Vaporware
    JEL: L12 L15 M21
    Date: 2012–10
  3. By: Choi, Jay; Jeon, Doh-Shin; Kim, Byung-Cheol
    Abstract: We analyze competition between interconnected networks when content is heterogeneous in its sensitivity to delivery quality. In a two-sided market framework, we characterize the equilibrium in a neutral network constrained to offer the same quality and assess the impact of such a constraint vis-à-vis a non-neutral network where Internet service providers (ISPs) are allowed to engage in second degree price discrimination with a menu of quality-price pairs. We find that the merit of net neutrality regulation depends crucially on content providers' business models. More generally, our analysis can be considered as a contribution to the literature on second-degree price discrimination in two-sided platform markets.
    Keywords: Net neutrality, Internet interconnection, Two-sided markets, Second-degree price discrimination, Access (Termination) charges, CPs' business models
    JEL: D4 L1 L5
    Date: 2012–11
  4. By: Netsanet Haile (Technology Management, Economics, and Policy Program, College of Engineering, Seoul National University); Jorn Altmann (Technology Management, Economics, and Policy Program, College of Engineering, Seoul National University)
    Abstract: IT service businesses can achieve economies of scale and scope faster than in traditional product businesses. In particular, as IT service platforms will become the founding infrastructure of our economies, the analysis and understanding of the value that a service platform can generate is of great importance. IT service platforms provide all involved market participants with different values. For this paper, we consider application service users, service developers and service platform providers as market participants and analyze the interrelationship between the value creations of these market participants. The basis for the description of the values and their interrelationship is the identification of parameters. Based on these parameters, a simulation model has been developed. It helps inferring the relative impact of these parameters on the evolution of the IT service platform stakeholder values. The results imply that there is a two-sided network effect. All stakeholders of a service platform mainly benefit from a growing installed base of application users. The benefit of a large service variety, however, mainly benefits the service platform provider. Therefore, we can state that a large fraction of the value from two-sided network effects goes to the platform provider.
    Keywords: IT Service Platform, Value Creation, System Dynamics, Two-Sided Network Effect, Business Modeling, IT Business, SaaS, Cloud Computing.
    JEL: C15 D02 D11 D46 D85 L14 L86 M15 M21 O31 O33
    Date: 2012–11
  5. By: Emmanouil Tranos (VU University Amsterdam); Karima Kourtit (VU University Amsterdam); Peter Nijkamp (VU University Amsterdam)
    Abstract: The majority of cities in our world is not only connected through conventional physical infrastructure, but increasingly through modern digital infrastructure. This paper aims to test whether digital connectivity leads to other linkage patterns among world cities than traditional infrastructure. Using a generalized spatial interaction model, this paper shows that geography (and distance) still matters for an extensive set of world cities analysed in the present study. With a view to the rapidly rising urbanization in many regions of our world, the attention is next focused on the emerging large cities in China in order to test the relevance of distance frictions - next to a broad set of other important explanatory variables - for digital connectivity in this country. Various interesting results are found regarding digital connectivity within the Chinese urban system, while also here geography appears to play an important role.
    Keywords: Digital Networks; Internet; Connectivity; World Cities; Death of Distance; Centrality; Smallâ€World Networks; Clustering; Gravity Model
    JEL: O18 H54 P25
    Date: 2012–11–16
  6. By: Canofari Paolo; Di Bartolomeo Giovanni; Piersanti Giovanni
    Date: 2012–10
  7. By: Najda-Janoszka, Marta
    Abstract: In cooperative networks firms appropriate value through bargaining over the economic benefits generated from successful execution of joint tasks and through internalizing the knowledge of partners. Consequently, acquisition and protection of knowledge are the key issues for collaborating parties. Taking into account the shortage of theoretical basis concerning protection of intellectual resources in networks, the paper presents an outline of this subject
    Keywords: cooperation; networks; intangible assets; value appropriation
    JEL: L14 D85 M20
    Date: 2011–03–05
  8. By: Janusz Mi\'skiewicz
    Abstract: A new algorithm of the analysis of correlation among economy time series is proposed. The algorithm is based on the power law classification scheme (PLCS) followed by the analysis of the network on the percolation threshold (NPT). The algorithm was applied to the analysis of correlations among GDP per capita time series of 19 most developed countries in the periods (1982, 2011), (1992, 2011) and (2002, 2011). The representative countries with respect to strength of correlation, convergence of time series and stability of correlation are distinguished. The results are compared with ultrametric distance matrix analysed by NPT.
    Date: 2012–11

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