nep-net New Economics Papers
on Network Economics
Issue of 2013‒01‒12
ten papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Factors of Multi-Sided Networks Pricing: Current State and Perspectives of Research By Blagov, E. Yu.
  2. The geography of European low-cost airline networks: A contemporary analysis By Frédéric Dobruszkes
  3. Welfare Analysis of Regulating Mobile Termination Rates in the UK with an Application to the Orange/T-Mobile Merger By David Harbord; Steffen Hoernig
  4. Regional Headquarters as Mode of Control for TNC Subsidiaries: A Network-Oriented Perspective By Joerg Freiling; Sven M. Laudien
  5. The Development and Diffusion of Digital Content By OECD
  6. Determining disruptive innovation potential of multi-sided platforms: case of digital books By Muravskii, D. V.; Yablonsky, S. A.
  7. Trading networks, abnormal motifs and stock manipulation By Zhi-Qiang Jiang; Wen-Jie Xie; Xiong Xiong; Wei Zhang; Yong-Jie Zhang; W. -X. Zhou
  8. Country effects in CEE3 stock market networks: a preliminary study By Výrost, Tomáš
  9. Influence of Social Networks on the entrance to foreign markets: Evidence from three Russian entrepreneurial firms By Shirokova, G. V.; Storchevoy, M. A.
  10. Identifying cross-sided liquidity externalities By Johannes A. Skjeltorp; Elvira Sojli; Wing Wah Tham

  1. By: Blagov, E. Yu.
    Abstract: Pricing strategies in multi-sided platforms are a considerably interesting object of research due to the complexity of pricing for different sides of the platform and due to the presence of network externalities. The paper analyzes the current state of the art of research of the factors lying in the foundations of the criteria of choosing the pricing strategies by the managers of the companies using the multi-sided platform business models. On the basis of the analysis, suggestions of the key potentially fruitful directions of further development of research in the area, considering both methodological and theoretical development aspects.
    Keywords: multi-sided platforms, multi-sided markets, pricing, network externalities, comparative bargaining power, switching costs,
    Date: 2012
  2. By: Frédéric Dobruszkes
    Abstract: Low-cost airlines (LCAs) have become essential actors supplying nationwide and continental air services.This paper focuses on the European case and investigates how the LCA spatial strategy hasevolved since the last available comprehensive analysis in 2004. Using comprehensive data, the analysisis conducted at three levels: global, cities and networks. It shows that LCAs now represent 31% ofintra-European airline seats. Although LCA business has expanded to Central-East Europe, Morocco,and a few remote areas, it remains mainly focused on the intra-Western market. In general, LCAs servelarge cities and tourist destinations. The use of secondary, regional airports is put into perspective. Servicevolatility is low at the city level but significant at the inter-city level. Average distance hasincreased, but most flights are short-haul. LCAs play an important role in launching new routes, thusdiversifying the European airline network, and in increasing frontal competition with traditional airlineson pre-existing routes. The niche markets are common in terms of routes but are rather limitedin terms of seats supplied. Actually, the main specificity of the largest LCAs is the provision of flightsthat do not serve the home country. A typology of networks demonstrates that there is no a singleEuropean low-cost model.
    Keywords: Low-cost airlines; Low-fare airlines; No-frills airlines; Air transport; Airline networks; Europe
    Date: 2013
  3. By: David Harbord; Steffen Hoernig
    Abstract: We present a calibrated model of the UK mobile telephony market with four mobile networks; calls to and from the fixed network; network-based price discrimination; and call externalities. Our results show that reducing mobile termination rates broadly in line with the recent European Commission Recommendation to either "pure long-run incremental cost"; reciprocal termination charges with fixed networks; or "Bill & Keep" (i.e. zero termination rates), increases social welfare, consumer surplus and networks' profits. Depending on the strength of call externalities, social welfare may increase by as much as £ 990 million to £ 4.5 billion per year, with Bill & Keep leading to the highest increase in welfare. We also apply the model to estimate the welfare effects of the 2010 merger between Orange and T-Mobile under different scenarios concerning MTRs, and predict that consumer surplus decreases strongly.
    Keywords: telecommunications, regulation, mobile termination rates, network effects, welfare, calibration; telecommunications, regulation, mobile termination rates, network effects, welfare, calibration JEL codes: D43, L13, L51, L96
    Date: 2012
  4. By: Joerg Freiling (University of Bremen - Faculty of Business Studies and Economics & ZenTra); Sven M. Laudien (Otto von Guericke University Magdeburg & ZenTra)
    Abstract: Our conceptual paper sheds light on the role of regional headquarters in coordinating the information and knowledge transfer within the transnational company (TNC) understood as globally dispersed network. We presume that organizational units are embedded in an internal network which is mainly dominated by the TNC headquarters (HQ) and at least one external network that is determined by relationships to the host government, suppliers, customers, (competing) firms, other organizational units, universities, and research labs. We regard the importance of local conditions that may lead to local-based subsidiary knowledge creation which is not triggered off and controlled by the HQ. This forces the HQ to recapture control over the subsidiary initiative to be able to govern it in an adequate and from a superior TNC point of view beneficial way. We believe that RHQ can be employed as organizational tools in this context to ensure an internal flow of information of adequate quality and quantity which resolves the problem of lacking information and shows how RHQ can fulfil this task. The paper contributes to business research by giving a distinct and widely new insight into the mode of operation of RHQ within TNC based on a network-oriented, information-focused perspective.
    Keywords: Transnational companies, headquarters-subsidiary relationship, coordination, governance, regional headquarters, network perspective, information cost approach
    JEL: D23 F23 L22 L29 M19
    Date: 2012–12
  5. By: OECD
    Abstract: Viewers are watching a growing share of video via Internet-based distribution systems. New digital content distribution services are having appreciable impacts on established media industries and network service providers in many OECD countries. The competitive landscape in media, already complex, will become even more multifaceted. Public policy frameworks in the media and telecommunications sector must be reviewed in light of these developments. This paper argues that convergence should be taken as the rule, rather than the exception. Careful application of best practices can address most policy concerns.
    Date: 2012–12–18
  6. By: Muravskii, D. V.; Yablonsky, S. A.
    Abstract: In this work, disruptive innovation theory is applied to studying multi-sided platforms (MSPs). It is argued that a successful MSP is one that is capable of making products, which are likely to disrupt the current market. The authors develop a mechanism by which it is possible to determine the disruptive potential of an innovation. Its application is then demonstrated on the case of E-publishing and digital books. Based on the study, we suggest that determining disruptive potential should be a key strategic question, when creating and managing MSPs.
    Keywords: Multi-sided platforms, Disruptive innovations, Innovation potential, E-publishing, Digital books,
    Date: 2012
  7. By: Zhi-Qiang Jiang (ECUST); Wen-Jie Xie (ECUST); Xiong Xiong (TJU); Wei Zhang (TJU); Yong-Jie Zhang (TJU); W. -X. Zhou (ECUST)
    Abstract: We study trade-based manipulation of stock prices from the perspective of complex trading networks constructed by using detailed information of trades. A stock trading network consists of nodes and directed links, where every trader is a node and a link is formed from one trader to the other if the former sells shares to the latter. Specifically, three abnormal network motifs are investigated, which are found to be formed by a few traders, implying potential intention of price manipulation. We further investigate the dynamics of volatility, trading volume, average trade size and turnover around the transactions associated with the abnormal motifs for large, medium and small trades. It is found that these variables peak at the abnormal events and exhibit a power-law accumulation in the pre-event time period and a power-law relaxation in the post-event period. We also find that the cumulative excess returns are significantly positive after buyer-initiated suspicious trades and exhibit a mild price reversal after seller-initiated suspicious trades. These findings can be better understood in favor of price manipulation. Our work shed new lights into the detection of price manipulation resorting to the abnormal motifs of complex trading networks.
    Date: 2012–12
  8. By: Výrost, Tomáš
    Abstract: The stock markets in the Czech Republic, Poland and Hungary (CEE3) are studied in the context of stock market networks. A total of 17 shares are followed during the period of 1998 – 2012. The daily returns are used for calculation of rolling correlations of various window lengths. The resulting correlation matrices are then used to construct network models. Minimum spanning trees (MST) are used as a form of abstraction in the graph structure, and their evolution is studied over time. The main objective of the paper is to test whether the individual assets cluster in the MSTs by the country to which they belong or whether the origin is of lesser importance, leading to cross-country links within the MSTs. The latter might hint at increasing integration within CEE3 stock markets. We find that at the beginning of the series, the MSTs exhibited very strong country clustering, which changed in the later 2000s. The country effects do not seem to be synchronized between all markets.
    Keywords: stock market networks; minimum spanning trees; stock market integration
    JEL: L14 G1
    Date: 2012–12–29
  9. By: Shirokova, G. V.; Storchevoy, M. A.
    Abstract: The paper is devoted to the influence of the social networks on entrance to foreign markets of Russian entrepreneurial firms. Although the majority of researchers assume that social networks play a key role in the process of internationalization of small and medium enterprises, the authors made an alternative claim questioning that influence. For answering the research questions the case method was used. On the basis of analysis of three cases of Russian entrepreneurial firms we found that social networks do play a much less important role in the internationalization process than it is usually assumed in the literature. The most important factors in expanding inter-national business networks are honest business practices that establish trust and commitment in the relationships of international business partners.
    Keywords: social networks, international entrepreneurship, Russia, case study,
    Date: 2012
  10. By: Johannes A. Skjeltorp (Norges Bank (Central Bank of Norway)); Elvira Sojli (Erasmus University and Duisenberg school of nance); Wing Wah Tham (Erasmus University and Tinbergen Institute)
    Abstract: We study the relevance of the cross-sided externality of liquidity between market makers and takers from the two-sided market perspective and test the empirical implications of the Foucault, Kadan, and Kandel (2012) model. We use exogenous changes in the make/take fee structure and a technological shock for liquidity takers, as experiments to identify cross-sided complementarities between liquidity makers and takers in the U.S. equity market. We find positive cross-sided externalities between liquidity providers and takers. Using the estimate of the externality from the instrumental variable regression, we find that the loss in revenue due to the increased subsidization of liquidity demanders from a fee change in a trading venue exceeds the increase in trading rate and revenue from the positive cross-sided liquidity externality. Our findings highlight the importance of accounting for participation externalities in the pricing strategy of trading venues. Our findings also shed light on the way the order-posting behavior of market makers and takers is interrelated and contribute to the on-going policy debate on the maker/taker practices in U.S. equity markets.
    Keywords: Liquidity cycle, liquidity externality, Two-sided markets; Make/take fees
    JEL: G10 G20 G14
    Date: 2012–12–18

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