nep-net New Economics Papers
on Network Economics
Issue of 2013‒01‒26
three papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Games With General Coalitional Structure By Selcuk, O.; Talman, A.J.J.
  2. Regulation of Road Accident Externalities when Insurance Companies have Market Power By Maria Dementyeva; Paul R. Koster; Erik T. Verhoef
  3. Estimating the Final Size of an Online User Base By Steven Lim

  1. By: Selcuk, O.; Talman, A.J.J. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: This paper introduces a new solution concept for cooperative games with general coalitional structure in which only certain sets of players, including the set of all players, are able to form feasible coalitions. The solution concept takes into account the marginal contribution of players. This marginal contribution can be a joint contribution of several players and is equally divided among those players. Any set system representing a coalitional structure induces a collection of coalitional trees, whose nodes may consist of subsets of players. As solution we take the average of the marginal contribution vectors that correspond to all coalitional trees. The solution is ecient and several other properties are studied and some special cases are considered.
    Keywords: TU game;cooperation structure;marginal contribution;set system;Shapley value
    JEL: C71
    Date: 2013
  2. By: Maria Dementyeva (VU University Amsterdam); Paul R. Koster (VU University Amsterdam); Erik T. Verhoef (VU University Amsterdam)
    Abstract: Accident externalities are among the most important external costs of road transport. We study the regulation of these when insurance companies have market power. Using analytical models, we compare a public-welfare maximizing monopoly with a private profit-maximizing monopoly, and markets where two or more firms compete. A central mechanism in the analysis is the accident externality that individual drivers impose on one another via their presence on the road. Insurance companies will internalize some of these externalities, depending on their degree of market power. We derive optimal insurance premiums, and "manipulable" taxes that take into account the response of the firm to the tax rule applied by the government. Furthermore, we study the taxation of road users under different assumptions on the market structure. We illustrate our analytical results with numerical examples, in order to better understand the determinants of the relative performance of different market structures.
    Keywords: accident externalities; traffic regulation; safety; second-best; market power
    JEL: D43 D62 R41 R48
    Date: 2013–01–18
  3. By: Steven Lim (University of Waikato)
    Abstract: The theoretical insights from the increasing returns literature, plus the interaction between consumers facilitated by networked technologies, have led to a synthesis in which virtual communities become uniquely valuable to an online firm. Strategy in social media markets, in particular, becomes one of promoting information sharing and connectivity within networks of user communities, deepening the relationship between the user base and sellers, and paving the way for a revenue payoff. When network externalities also suggest the possibility of barriers to entry and lock-in operating on the demand side, the importance of a large user base correspondingly increases. From a finance perspective the relevant question then is: how large will a firm’s user base eventually become? Cauwels and Sornette (2011) answer this question by positing an S-shaped model of user growth. We extend their model by introducing competition from another online firm. With this extension, S-shaped growth is altered, potentially invalidating Cauwels and Sornette’s (2011) results.
    Keywords: user base growth; Facebook valuation; S-curves
    JEL: C15 D85 G17
    Date: 2012–12–11

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