nep-net New Economics Papers
on Network Economics
Issue of 2014‒08‒16
four papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Net Neutrality and the Incentives (Not) to Exclude Competitors By Dewenter, Ralf; Rösch, Jürgen
  2. Dynamics in two networks based on stocks of the US stock market By Leonidas Sandoval Junior
  3. An Experimental Study of Network Formation with Limited Observation By Michael Caldara; Michael McBride
  4. The Effects of News Events on Market Contagion: Evidence from the 2007-2009 Financial Crisis By Thanaset Chevapatrakul; Kai-Hong Tee

  1. By: Dewenter, Ralf (Helmut Schmidt University, Hamburg); Rösch, Jürgen (Helmut Schmidt University, Hamburg)
    Abstract: This paper analyses the incentives of a vertical integrated Internet service provider (ISP) to block competitors from content markets. Using a simple model we find that the ISP does not block competing content providers as long as the contents are differentiated sufficiently. Exclusion only takes place when the competitor offers perfect homogeneous content and the ISP has a local monopoly over its Internet access customers or if network effects are strong. In this case, however, the abuse of market power can at least in Europe be prohibited by competition authorities. That is, according to our model there is no need for a regulation of net neutrality.
    Keywords: net neutrality; competition; Internet service providers
    JEL: D40 K20 L12 L82 L86
    Date: 2014–07–28
  2. By: Leonidas Sandoval Junior
    Abstract: We follow the main stocks belonging to the New York Stock Exchange and to Nasdaq from 2003 to 2012, through years of normality and of crisis, and study the dynamics of networks built on two measures expressing relations between those stocks: correlation, which is symmetric and measures how similar two stocks behave, and Transfer Entropy, which is non-symmetric and measures the influence of the time series of one stock onto another in terms of the information that the time series of one stock transmits to the time series of another stock. The two measures are used in the creation of two networks that evolve in time, revealing how the relations between stocks and industrial sectors changed in times of crisis. The two networks are also used in conjunction with a dynamic model of the spreading of volatility in order to detect which are the stocks that are most likely to spread crises, according to the model. This information may be used in the building of policies aiming to reduce the effect of financial crises.
    Date: 2014–08
  3. By: Michael Caldara (Economic Science Institute, Chapman University); Michael McBride (Department of Economics, University of California-Irvine)
    Abstract: Many social and economic networks emerge among actors that only partially observe the network when forming network ties. We ask: what types of network architectures form when actors have limited observation, and does limited observation lead to less efficient structures? We report numerous results from a laboratory experiment that varies both network observation and the cost of forming links. Overall, we find that limited network observation does not inevitably lead to highly inefficient networks but instead might actually inhibit inefficient positional jockeying among actors.
    Keywords: Networks; Limited observation; Coordination
    JEL: C92 D83 D85
    Date: 2014–07
  4. By: Thanaset Chevapatrakul; Kai-Hong Tee
    Abstract: In this paper, we use the quantile regression technique together with the coexceedance, a contagion measure, to assess the extent to which news events contribute to contagion in the stock markets during the crisis period between 2007 and 2009. Studies have shown that, not only the subprime crisis leads to a global recession, but the e!ects on the global stock markets have also been significant. We track the news events, both in the UK and the US, using the global recession timeline. We observe that the news events related to ad hoc bailouts of individual banks from the UK have a contagion e!ect throughout the period for most of the countries under investigation. This, however, is not found to be the case for the news events originating from the US. Our findings regarding the evidence of contagion e!ects in the UK reinforce the argument that spreads and contagion — an outcome of the risk perception of financial markets — are solely a result of the behaviour of investors or other financial market participants.
    Keywords: Credit crisis, Coexceedance, Quantile Regression, News Events, Risk Perception
    Date: 2014

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