nep-net New Economics Papers
on Network Economics
Issue of 2014‒01‒17
eight papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. A Note on Networks of Collaboration in Multi-market Oligopolies By Pascal Billand; Christophe Bravard; Subhadip Chakrabarti; Sudipta Sarangi
  2. Fixed-Mobile Integration By Steffen Hoernig; Marc Bourreau; Carlo Cambini
  3. Influence and Social Tragedy in Networks By Yann Rébillé; Lionel Richefort
  4. Endogenous banks' networks, cascades and systemic risk By Bluhm, Marcel; Faia, Ester; Krahnen, Jan Pieter
  5. Competition and Cooperation in Network Games By Konovalov, Alexander
  6. Network Analysis of World Trade using the BACI-CEPII dataset. By De Benedictis, L.; Nenci, S.; Santoni, G.; Tajoli, L.; Vicarelli, C.
  7. Mutual Information Rate-Based Networks in Financial Markets By Pawe{\l} Fiedor
  8. Referenda outcomes and the influence of polls: a social network feedback process By Ariel Guerreiro; Joao Amaro de Matos

  1. By: Pascal Billand (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon); Christophe Bravard (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon); Subhadip Chakrabarti (Finance and economics research group. School of management. Queen's University. Belfast - Queen's University); Sudipta Sarangi (Department of Economics, Louisiana State University - Department of Economics, Louisiana State University)
    Abstract: In this note, we extend the Goyal and Joshi's model of network of collaboration in oligopoly to multi-market situations. We examine the incentive of firms to form links and the architectures of the resulting equilibrium networks in this setting. We also present some results on efficient networks.
    Keywords: R&D Collaborations; Network Formation; Multi-market Oligopolies
    Date: 2014–01–07
  2. By: Steffen Hoernig; Marc Bourreau; Carlo Cambini
    Abstract: Often, fixed-line incumbents also own the largest mobile network. We consider the effect of this joint ownership on market outcomes. Our model predicts that while fixed-to-mobile call prices to the integrated mobile network are more efficient than under separation, those to rival mobile networks are distorted upwards, amplifying any incumbency advantage. As concerns potential remedies, a uniform off-net pricing constraint leads to higher welfare than functional separation and even allows to maintain some of the efficiency gains. JEL codes: L51, L92
    Keywords: Network competition, On/off-net pricing, Integration, Call externality
    Date: 2013
  3. By: Yann Rébillé (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272); Lionel Richefort (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272)
    Abstract: We model agents in a network game of strategic complements and negative externalities. Sufficient conditions for the existence of a unique Nash equilibrium and of a unique social optimum are established. Under these conditions, we find that players with more vulnerable locations in the network exert more effort at equilibrium, and that the most influential players should exert less effort at efficiency. We then find structural conditions under which each player exerts strictly more effort than her efficient level, whether the social optimum be interior or not.
    Keywords: Network; strategic complements; equilibrium; efficiency; social tragedy.
    Date: 2014–01–06
  4. By: Bluhm, Marcel; Faia, Ester; Krahnen, Jan Pieter
    Abstract: We develop a dynamic network model whose links are governed by banks' optimizing decisions and by an endogenous tâtonnement market adjustment. Banks in our model can default and engage in firesales: risk is trasmitted through direct and cascading counterparty defaults as well as through indirect pecuniary externalities triggered by firesales. We use the model to assess the evolution of the network configuration under various prudential policy regimes, to measure banks' contribution to systemic risk (through Shapley values) in response to shocks and to analyze the effects of systemic risk charges. We complement the analysis by introducing the possibility of central bank liquidity provision. --
    Keywords: Network formation,tâtonnement,contagion
    JEL: G0 G2
    Date: 2013
  5. By: Konovalov, Alexander (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We consider games where agents are embedded in a network of bilateral relationships and have multivariate strategy sets. Some components of their strategies correspond to individual activities, while the other strategic components are related to joint activities and interaction with the partners. We introduce several new equilibrium concepts that account for the possibility that players act competitively in individual components of their strategy but cooperate on the components corresponding to joint activity or collaboration. We apply these concepts to the R&D collaboration networks model where firms engage in bilateral joint projects with other firms. The analysis shows that investments are highest under bilateral cooperation and lowest under full cooperation because the spillovers associated to bilateral collaboration are bound to the partnership. This leads to welfare being maximized under bilateral collaboration when there are a few firms in the market and under non-cooperation in markets with many firms; full cooperation is never social welfare maximizing. Investigating the issue of endogenous network formation, we find that bilateral cooperation increases (lowers) the profits of more (less) connected firms. However, this does not always lead to a denser stable network of R&D collaboration under bilateral cooperation.
    Keywords: network games; bilateral cooperation; hybrid equilibrium; R&D collaboration networks
    JEL: L13 L14 L22 O31 O32
    Date: 2014–01
  6. By: De Benedictis, L.; Nenci, S.; Santoni, G.; Tajoli, L.; Vicarelli, C.
    Abstract: In this paper we explore the BACI-CEPII database using Network Analysis. Starting from the visualization of the World Trade Network, we then define and describe the topology of the network, both in its binary version and in its weighted version, calculating and discussing some of the commonly used network's statistics. We finally discuss some specific topic that can be studied using Network Analysis and International Trade data, both at the aggregated and sectoral level. The analysis is done using multiple software (Stata, R, and Pajek). The scripts to replicate part of the analysis are included in the appendix, and can be used as an hands-on tutorial. Moreover, the World Trade Network local and global centrality measures, for the unweighted and the weighted version of the Network, calculated using the bilateral aggregate trade data for each country (178 in total) and each year (from 1995 to 2010,) can be downloaded from the CEPII webpage.
    Keywords: International trade, Network Analysis, Density, Centrality, Stata, R, Pajek.
    JEL: F11 F14
    Date: 2013
  7. By: Pawe{\l} Fiedor
    Abstract: In the last years efforts in econophysics have been shifted to study how network theory can facilitate understanding of complex financial markets. Main part of these efforts is the study of correlation-based hierarchical networks. This is somewhat surprising as the underlying assumptions of research looking at financial markets is that they behave chaotically. In fact it's common for econophysicists to estimate maximal Lyapunov exponent for log returns of a given financial asset to confirm that prices behave chaotically. Chaotic behaviour is only displayed by dynamical systems which are either non-linear or infinite-dimensional. Therefore it seems that non-linearity is an important part of financial markets, which is proved by numerous studies confirming financial markets display significant non-linear behaviour, yet network theory is used to study them using almost exclusively correlations and partial correlations, which are inherently dealing with linear dependencies only. In this paper we introduce a way to incorporate non-linear dynamics and dependencies into hierarchical networks to study financial markets using mutual information and its dynamical extension: the mutual information rate. We estimate it using multidimensional Lempel-Ziv complexity and then convert it into an Euclidean metric in order to find appropriate topological structure of networks modelling financial markets. We show that this approach leads to different results than correlation-based approach used in most studies, on the basis of 15 biggest companies listed on Warsaw Stock Exchange in the period of 2009-2012 and 91 companies listed on NYSE100 between 2003 and 2013, using minimal spanning trees and planar maximally filtered graphs.
    Date: 2014–01
  8. By: Ariel Guerreiro; Joao Amaro de Matos
    Abstract: This paper proposes a model to explain the differences between outcomes of referenda and the voting trends suggested by polls. Two main effects are at stake. First, the evolution of the voters' attitudes is conditional on the public information made available to them. Second, the predisposition toward abstention among individuals within each voting group may be different. Our model describes how these two aspects of decision making may interact, showing how publicly available information may amplify the distinct tendency toward abstention between both groups and thus affect the outcome of the referendum. JEL codes:
    Date: 2013

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