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on Network Economics |
| By: | Filistrucchi, L.; Geradin, D.A.A.G.; Damme, E.E.C. van (Tilburg University, Tilburg Law and Economics Center) |
| Abstract: | Abstract: We review the burgeoning literature on two-sided markets focusing on the different definitions that have been proposed. In particular, we show that the well-known definition given by Evans is a particular case of the more general definition proposed by Rochet and Tirole. We then identify the crucial elements that make a market two-sided and, drawing from both theory and practice, derive suggestions for the identification of the two-sided nature of a market. Our suggestions are relevant not only for the analysis of traditional two-sided markets, such as newspapers and payment cards, but also for the analysis of many new markets, such as those for online social networks, online search engines and Internet news aggregators. |
| Keywords: | two-sided markets;platforms;network effects. |
| JEL: | L40 L50 K21 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubtil:2012008&r=net |
| By: | Jakub Steiner; Colin Stewart |
| Abstract: | We present a two-stage coordination game in which early choices of experts with special interests are observed by followers who move in the second stage. We show that the equilibrium outcome is biased toward the experts' interests even though followers know the distribution of expert interests and account for it when evaluating observed experts' actions. Expert influence is fully decentralized in the sense that each individual expert has a negligible impact. The bias in favor of experts results from a social learning effect that is multiplied through a coordination motive. We show that the total effect can be large even if the direct social learning effect is small. We apply our results to the diffusion of products with network externalities and the onset of social movements. |
| Keywords: | voting; coordination; experts |
| JEL: | D72 D82 D83 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp458&r=net |
| By: | Cavagnac, Michel; Cheikbossian, Guillaume |
| Abstract: | This paper analyzes the problem of international environmental cooperation as a coalition formation game. For this purpose, we develop a simple model with three countries of unequal size. Strate- gic interactions between those countries come from the imperfect competition among producers in global markets and from the transboundary pollution generated by the ?rms. To capture e¢ ciency gains from coordinating policies, countries can join a coalition and sign an international environmental agreement. The equilibrium coalition structure then depends on the country-size asymmetry and on the marginal environmental damage. Interestingly, we show that the grand coalition is less likely to emerge as an equi- librium outcome once two countries form a subcoalition. Furthermore, the further enlargement of the initial subcoalition can be blocked either by the outsider or by the insiders. |
| Keywords: | Tax coordination, Transboundary Pollution, International Trade, Oligopoly, Coalition Formation |
| JEL: | F55 H23 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:26607&r=net |
| By: | Kummer, Michael E.; Saam, Marianne; Halatchliyski, Iassen; Giorgidze, George |
| Abstract: | When contributing content on large online platforms, producers of user-generated content have to decide where to contribute. On a complex and dynamic platform like Wikipedia, this decision is expected to depend on the way the content is organized. We analyse whether the hyperlinks on Wikipedia channel the attention of producers towards more central articles. We observe a sample 7,635 articles belonging to the category 'Economics' on German Wikipedia over 153 weeks and measure their centrality both within this category and in the network of over one million German Wikipedia articles. Our analysis reveals that an additional link from the observed category is associated with around 140 bytes of additional content and with an increase in the number of authors by nearly 0.5. Moreover we observe that the rate of content generation increases notably when previously unlinked articles get connected to the main cluster in the category. -- |
| Keywords: | Wikipedia,network position,user-generated content,hyperlinks |
| JEL: | L14 D83 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:12053r&r=net |
| By: | Romero, José Gabriel; Kovarik, Jaromir; Mengel, Friederike |
| Abstract: | We report the findings of an experiment designed to study how people learn and make decisions in network games. Network games offer new opportunities to identify learning rules, since on networks (compared to e.g. random matching) more rules differ in terms of their information requirements. Our experimental design enables us to observe both which actions participants choose and which information they consult before making their choices. We use this information to estimate learning types using maximum likelihood methods. There is substantial heterogeneity in learning types. However, the vast majority of our participants' decisions are best characterized by reinforcement learning or (myopic) best-response learning. The distribution of learning types seems fairly stable across contexts. Neither network topology nor the position of a player in the network seem to substantially affect the estimated distribution of learning types. |
| Keywords: | experiments, game theory, heterogeneity, learning, maximum likelihood method, networks |
| JEL: | C72 C90 C91 D85 |
| Date: | 2012–11–23 |
| URL: | http://d.repec.org/n?u=RePEc:ehu:ikerla:9171&r=net |
| By: | Vaz, Margarida; Silva, Jorge; Baltazar, Emília; Marques, Tiago; Reis, Tiago |
| Abstract: | The performance of an airport and its efficiency has been measured generally from its operational and financial data, and on that basis, classified its relative position in the set of airports. But this methodology, by itself, is insufficient to determine relationships between a given position in the ranking of an airport and the generated value associated with that position, either within the entire business system of the airport or along the inter-relationships that it establishes with the surrounding community. We argue that networks are fundamental instruments for the development of the business system of airport’s landside areas. Applying the Value Network Analysis (VNA) to the Air Cargo we concluded that this approach provided a network ecosystem perspective into how processes and people create value within the Cargo Network. |
| Keywords: | airport’s landside areas; business systems; air cargo network; social network analysis; value network analysis |
| JEL: | L93 P25 R41 |
| Date: | 2012–04–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43232&r=net |
| By: | Holmberg, Pär (Research Institute of Industrial Economics (IFN)); Philpott, Andrew (Department of Engineering Science) |
| Abstract: | Transport constraints limit competition and arbitrageurs' possibilities of exploiting price differences between goods in neighbouring markets, especially when storage capacity is negligible. We analyse this in markets where strategic producers compete with supply functions, as in wholesale electricity markets. For networks with a radial structure, we show that existence of supply function equilibria (SFE) is ensured if demand shocks are suffciently evenly distributed, and solve for SFE in symmetric radial networks with uniform multi-dimensional nodal demand shocks. An equilibrium offer in such networks is identical to an SFE offer in an isolated node where the symmetric number of firms has been scaled by a market integration factor, the expected number of nodes that are completely integrated with a node in the symmetric network. The analysis can be extended to mesh networks (as in electricity systems) although the resulting models do not simplify as in the radial case. |
| Keywords: | Transmission network; Graph theory; Market integration; Wholesale electricity markets |
| JEL: | C72 D43 D44 L91 |
| Date: | 2012–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0945&r=net |
| By: | Clément Bosquet (London School of Economics and Political Science (Spatial Economic Research Center), and Aix-Marseille University (Aix-Marseille School of Economics), CNRS, & EHESS.); Pierre-Philippe Combes (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS.); |
| Abstract: | Thanks to a unique individual dataset of French academics in economics, we explain individual publication and citation records by gender and age, coauthorship patterns (average number of authors per article and size of the co-author network) and specialisation choices (percentage of output in each JEL code). The analysis is performed on both EconLit publication scores (adjusted for journal quality) and Google Scholar citation indexes, which allows us to present a broad picture of knowledge diffusion in economics. Citations are largely driven by publication records but also substantially increased by larger research team size and co-author networks. |
| Keywords: | economics of science, productivity determinants, knowledge diffusion, publication scores, citation indexes |
| JEL: | J24 O31 J45 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:1236&r=net |
| By: | Lahno, Amrei M.; Serra-Garcia, Marta |
| Abstract: | This paper examines the effect of peers on individual risk taking. In the absence of informational motives, we investigate why social utility concerns may drive peer effects. We test for two main channels: utility from payoff differences and from conforming to the peer. We show experimentally that social utility generates substantial peer effects in risk taking. These are mainly explained by utility from payoff differences, in line with outcomebased social preferences. Contrary to standard assumptions, we show that estimated social preference parameters change significantly when peers make active choices, compared to when lotteries are randomly assigned to them. |
| Keywords: | Peer Effects; Decision Making under risk; Social Comparison; Social Preferences; Laboratory Experiment |
| JEL: | C91 C92 D03 D83 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:14309&r=net |
| By: | Pascal Billand (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); Christophe Bravard (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); Sudipta Sarangi (Department of Economics, Louisiana State University - Department of Economics, Louisiana State University) |
| Abstract: | We study the formation of mutual insurance networks in a model where every agent who obtains more resources gives a -xed amount of resources to all agents who have obtained less resources. The low resource agent must be directly linked to the high resource agent to receive this transfer. We identify the pairwise stable networks and e-cient networks. Then, we extend our model to situations where agents di-er in their generosity with regard to the transfer scheme. We show that there exist conditions under which in a pairwise stable network agents who provide the same level of transfers are linked together, while there are no links between agents who provide high transfers and agents who provide low transfers. |
| Keywords: | Mutual insurance networks; Pairwise stable networks; Effi cient networks |
| Date: | 2012–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00768430&r=net |
| By: | Okamuro, Hiroyuki; Ikeuchi, Kenta |
| Abstract: | Business start-ups are expected to make major contributions to economic growth. However, most of them lack internal business resources that are necessary for survival and growth. Therefore, business and financial networks that provide business opportunity and external resources are essential for the post-entry performance of start-ups. However, previous studies have regarded such networks as exogenous and not explicitly investigated the determinants of network formation. We argue that the formation of business and financial networks by start-up firms depends on founder’s human capital measured by university education and work experience, and empirically test it with our original survey data of recent Japanese start-ups. Moreover, we focus not only on the size of such networks, but also their quality measured as the status of major partners. Empirical results show that founder’s industry experience for 10 or more years has positive and significant effect on the size of both business and financial networks, while founder’s university education positively affects not only the size, but also the quality of both business and financial networks. Moreover, we also find that founder’s specific strength and personality also significantly affect network formation. We find no distinct differences between the determinants of business and financial network. |
| Keywords: | business network, financial network, start-up, founder, human capital |
| JEL: | L25 L26 M13 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:hit:cinwps:21&r=net |
| By: | Engelhardt, Sebastian; Freytag, Andreas; Köllmann, Volker |
| Abstract: | We discuss competition effects and possible regulation of vertical integration in internet-based two-sided markets against the background of the ongoing antitrust allegations against Google. In such markets, network effects and economics of scale often lead to dominating companies which are integrated over several markets. Although implying efficiency gains, the (dynamic) network effects and economics of scale may also create significant barriers to entry. These barriers of entry can be lowered if entrants can appropriate (parts of) the dynamic effects accumulated by the incumbents. At the same time, such externalities reduce incentives to invest in dynamic effects in the first place. Measures by firms that deter multi homing, increase switching costs or create incompatibilities are anti-competitive and should thus be prohibited. Systematic top listing of own products in the search results can leverage market power and reduce competition. However, there is yet no appropriate economic theory on the power’ of search engines. The often used concept of ‘search neutrality’ is not convincing. |
| Keywords: | two-sided markets; Internet; Google; market power; competition policy |
| JEL: | L13 L42 L50 L86 |
| Date: | 2012–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43326&r=net |