nep-net New Economics Papers
on Network Economics
Issue of 2013‒11‒29
four papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Switching Costs and Network Effects – How Much Do they Really Matter in Mobile Telecommunications? By Mikołaj Czajkowski; Maciej Sobolewski
  2. How social ties affect peer-group effects: a case of university students By Oleg Poldin; Dilyara Valeeva; Maria Yudkevich
  3. Interactive knowledge exchanges under complex social relations: A simulation model By Cowan, Robin; Kamath, Anant
  4. Coalitional Approaches to Collusive Agreements in Oligopoly Games By Sergio Currarini; Marco A. Marini

  1. By: Mikołaj Czajkowski (Faculty of Economic Sciences, University of Warsaw); Maciej Sobolewski (Faculty of Economic Sciences, University of Warsaw)
    Abstract: Our study focuses on the identification and the measurement of switching costs and network effects in mobile telecommunications. Although these two phenomena create similar consumer lock-in mechanisms, there are no empirical studies that integrate them into one model of subscriber’s behavior. Our study fills this gap by applying stated preference valuation methods to a representative sample of individual mobile phone users in Poland. We find that number portability can be attributed to only approximately 50% of the total switching costs associated with changing either the provider or the service and the remaining part is associated with status quo inertia. Additionally, we show that because network effects play an important role in service valuation, they lead to strengthening the lock-in mechanisms even further. Our study provides the first empirical measurements of the relative importance of these simultaneous effects and provides the estimates of their monetary value.
    Keywords: Switching costs, network effects, mobile telecommunications, mobile number portability, brand valuation, stated preference, non-market valuation, discrete choice experiment, random parameters multinomial logit model
    JEL: L1 L86 O3
    Date: 2013
  2. By: Oleg Poldin (Associate professor, National Research University Higher School of Economics (HSE), 25/12 Bolshaja Pecherskaja Ulitsa, Nizhny Novgorod 603155, Russia, researcher at Center for Institutional Studies, HSE.); Dilyara Valeeva (Junior researcher, Center for Institutional Studies, HSE.); Maria Yudkevich ((Corresponding Author) Director, Center for Institutional Studies, HSE, Russia, 101000 Moscow, Myasnitskaya street, 20.)
    Abstract: Among the key issues of peer effects estimation is the correct identification of relevant peers. In this study, we explore how the individual performance of university students is influenced by characteristics and achievements of peers from individual’s social network. The analysis uses data from two directed networks: a network of friends and a network of study partners for thirdyear students at a top-tier Russian university. Data on network ties in randomly formed student groups enables us to address the endogeneity problem and disentangle the influence of peers’ performance from the effect that a peer’s background has on students. We show that both the GPA of peers and their ability measures are significant in the estimated regression model. A onepoint increase in the average GPA of peers is associated with an increase in an individual student’s own GPA of approximately one fourth. The regression on the data from the network of study partners has slightly greater explanatory power than the analys is based on data from the network of friends. No effect from a student’s classmates is found in the model that assumes group interactions occur between group mates
    Keywords: peer effects, higher education, student achievement, social networks.
    JEL: I23 I24
    Date: 2013
  3. By: Cowan, Robin (UNU-MERIT/MGSoG, Maastricht University, and BETA, Universite de Strassbourg); Kamath, Anant (UNU-MERIT/MGSoG)
    Abstract: This is a model of knowledge exchange by means of informal interaction among agents in low technology clusters. What this study seeks to do is to colour these exchanges by placing them in an environment of complex social relations, test whether the small-world network structure is the most favourable for knowledge exchanges in these environments, and explore the influence of social relations and network distance. These enquiries are the contribution of this model to the existing series of studies on efficient network structures for knowledge diffusion. We find that the small-world network structure may not be the best network structure for highest and most equitable knowledge distribution, when knowledge exchanges are undertaken in environments of complex social relations. Also, we confirm that the highest and most equitable knowledge distribution is achieved when there is perfect affinity among the agents.
    Keywords: Knowledge Exchanges, Small-Worlds, Social Networks, Complex Social Relations
    JEL: D85 O33 Z13
    Date: 2013
  4. By: Sergio Currarini (University of Leicester, Universita' di Venezia and Euro-Mediterranean Center on Climate Change); Marco A. Marini (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza")
    Abstract: In this paper we review a number of coalitional solution concepts for the analysis of cartel and merger stability in oligopoly. We show that, although so far the industrial organization and the cooperative game-theoretic literature have proceeded somehow independently on this topic, the two approaches are highly inter-connected. We first consider the basic problem of the stability of the whole industry association of firms under oligopoly and, for this purpose, we introduce the concept of core in oligopoly games. We show that different assumptions on the behaviour as well as on the timing of the coalitions of firms yield very different results on the set of allocations which are core-stable. We then consider the stability of associations of firms organized in coalition structures different from the grand coalition. To this end, various coalition formation games recently introduced by the so called endogenous coalition formation literature are critically reviewed. Again, different assumptions concerning the timing and the behaviour of firms are shown to yield a wide range of different results. We conclude by reviewing some recent extensions of the coalitional analysis to oligopolistic markets with heterogeneous firms and incomplete information.
    Keywords: Cooperative Games, Coalitions, Mergers, Cartels, Core, Games with Ex- ternalities, Endogenous Coalition Formation
    Date: 2013

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