nep-net New Economics Papers
on Network Economics
Issue of 2013‒07‒28
five papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Investment Coordination in Network Industries: The Case of Electricity Grid and Electricity By Höffler, Felix; Wambach, Achim
  2. The Network Origins of Large Economic Downturns By Daron Acemoglu; Asuman Ozdaglar; Alireza Tahbaz-Salehi
  3. Governance work in inter-organizational networks: driving processes and structures By Chahira Mehouachi; Véronique Perret
  4. Bargaining and Power By Dominik Karos
  5. City networks and the socio-ecological transition. A European inventory By Adrien Labaeye; Thomas Sauer

  1. By: Höffler, Felix (Energiewirtschaftliches Institut an der Universitaet zu Koeln); Wambach, Achim (Department of Economics, University of Cologne)
    Abstract: Liberalization of network industries frequently separates the network from the other parts of the industry. This is important in particular for the electricity industry where private firms invest into generation facilities, while net- work investments usually are controlled by regulators. We discuss two regulatory regimes. First, the regulator can only decide on the network extension. Second, she can additionally use a "capacity market" with payments contingent on private generation investment. For the first case, we find that even absent asymmetric information, a lack of regulatory commitment can cause inefficiently high or inefficiently low investments. For the second case, we develop a standard handicap auction which implements the first best under asymmetric information, if there are no shadow costs of public funds. With shadow costs, no simple mechanism can implement the second best outcome.
    Keywords: Regulation; commitment; capacity markets; transmission system investment
    JEL: D44 K23 L51 L94
    Date: 2013–06–24
  2. By: Daron Acemoglu; Asuman Ozdaglar; Alireza Tahbaz-Salehi
    Abstract: This paper shows that large economic downturns may result from the propagation of microeconomic shocks over the input-output linkages across different firms or sectors within the economy. Building on the framework of Acemoglu et al. (2012), we argue that the economy’s input-output structure can fundamentally reshape the distribution of aggregate output, increasing the likelihood of large downturns from infinitesimal to substantial. More specifically, we show that an economy with non-trivial intersectoral input-output linkages that is subject to thin-tailed productivity shocks may exhibit deep recessions as frequently as economies that are subject to heavy-tailed shocks. Moreover, we show that in the presence of input-output linkages, aggregate volatility is not necessarily a sufficient statistic for the likelihood of large downturns. Rather, depending on the shape of the distribution of the idiosyncratic shocks, different features of the economy’s input-output network may be of first-order importance. Finally, our results establish that the effects of the economy’s input-output structure and the nature of the idiosyncratic firm-level shocks on aggregate output are not separable, in the sense that the likelihood of large economic downturns is determined by the interplay between the two.
    JEL: C67 E32
    Date: 2013–07
  3. By: Chahira Mehouachi (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris IX - Paris Dauphine); Véronique Perret (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris IX - Paris Dauphine)
    Abstract: There are many calls for further investigation of the underlying processes, practices and specificities of governance when economic exchanges are organized within networks. Through an examination of what governance involves and how it occurs in two clusters specialized in digital and video game industries, our multi-method study provides useful insights in the finalities and purposes of governance in an inter-organizational and collaborative context, the main tools and mechanisms that are being used and the structures supporting network governance. Our findings shed also light upon the processual nature of governance in networks contexts. Governance is a set of processes, or a "meta-process", that are geared toward the (1) creation, the maintenance and the evolution of a set of common interests, (2) the design of a adapted architecture of rights and obligations and (3) the crafting of different mechanisms of coordination and control. These processes aim also to adapt the structure of governance continually to the frequent changes in the network attributes. We coin this process of governance functioning, evolution and continuous (re) actualization as governance work and argue for a new perspective about network governance.
    Keywords: network governance, interorganizational networks, video game industry, creative industries
    Date: 2013–07–03
  4. By: Dominik Karos (Department of Economics and Statistics, Saarland University)
    Abstract: Given a simple game, a power configuration specifies the power of each player in each winning coalition. We introduce a new power configuration which takes into account bargaining among players in coalitions. We show that under very weak conditions on a bargaining solution there is a power configuration which is stable with respect to renegotiations. We further show that given this power configuration there is a coalition which is both internally and Nash stable. We consider two different bargaining solutions on apex games and show under which conditions there are core stable coalitions. Finally, we investigate how infeasible coalition might affect the outcome and apply our model to the German parliament.
    Keywords: Coalition Formation, Power, Bargaining
    JEL: C71 D71
    Date: 2013–06
  5. By: Adrien Labaeye; Thomas Sauer
    Abstract: Area 5 focuses on the regional and local dimensions of the new European path to socio-ecological transition. Its central assumption is that any strategy developed to enhance a socio-ecological transition is unlikely to yield strong results unless the resources of regional and local actors are mobilised and the complex interactions between central policy initiatives and their regional or local implementation are taken into account. In order to better understand how cities and regions initiate processes of change in relation to sustainability, this milestone focuses on networks of cities, regions and their communities around the issue of sustainable development. Indeed, those networks have often been described in the literature as a crucial element in implementing sustainable development at subnational and local levels and across borders. This milestone takes the form of a short review of the relevant literature that introduces an inventory of the various sustainability networks involving cities and regions across Europe mapping them against a set of established criteria. Findings of the inventory's analysis are presented, some new avenues for research and policy-making being suggested.
    Keywords: Academic research, biophysical constraints, ecological excellence, ecological innovation, entrepreneurship, European governance, gender, good governance, green jobs, holistic and interdisciplinary approach, institutional reforms, labour markets, multi-level governance, research, social capital as growth driver, social innovation, socio-ecological transition, sustainable growth, sustainable cities, sustainable urban transition
    JEL: B4 O18 O52 O57 R11 R23
    Date: 2013–07

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