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on Network Economics |
| By: | Serguei Saavedra; Luis J. Gilarranz; Rudolf P. Rohr; Michael Schnabel; Brian Uzzi; Jordi Bascompte |
| Abstract: | Traded corporations are required by law to have a majority of outside directors on their board. This requirement allows the existence of directors who sit on the board of two or more corporations at the same time, generating what is commonly known as interlocking directorates. While research has shown that networks of interlocking directorates facilitate the transmission of information between corporations, little is known about the extent to which such interlocking networks can explain the fluctuations of stock price returns. Yet, this is a special concern since the risk of amplifying stock fluctuations is latent. To answer this question, here we analyze the board composition, traders' perception, and stock performance of more than 1500 US traded corporations from 2007-2011. First, we find that the fewer degrees of separation between two corporations in the interlocking network, the stronger the temporal correlation between their stock price returns. Second, we find that the centrality of traded corporations in the interlocking network correlates with the frequency at which financial traders talk about such corporations, and this frequency is in turn proportional to the corresponding traded volume. Third, we show that the centrality of corporations was negatively associated with their stock performance in 2008, the year of the big financial crash. These results suggest that the strategic decisions made by interlocking directorates are strongly followed by stock analysts and have the potential to correlate and amplify the movement of stock prices during financial crashes. These results may have relevant implications for scholars, investors, and regulators. |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1410.6646&r=net |
| By: | Adriaan Hendrik van der Weijde (VU University Amsterdam) |
| Abstract: | This paper analyzes the effects of price differentiation and discrimination by a monopolistic transport operator, which sets fares in a congestible network. Using three models, with different spatial structures, we describe the operator’s optimal strategies in an unregulated market, a market where price differentiation is not allowed (i.e., ticket prices must be the same for all users), and a market where price discrimination is illegal (i.e., ticket prices must only differ with the marginal external costs of users), and analyze the welfare effects of uniform and non-discriminatory pricing policies. The three models allow us to consider three different forms of price differentiation and discrimination in networks: by user class, by origin-destination pair, and by route. We generalize the existing literature, in which groups usually only differ in their value of time, and hence, there is no distinction between differentiation and discrimination. In our models, users may also have different marginal external costs; we show how these two differences interact. We also show how non-differentiated and non-discriminatory policies may increase or decrease welfare, and that non-discrimination can be worse than non-differentiation. The network models show that results obtained for a single-link network can be generalized to a situation where operators price-discriminate or differentiate based on users’ origins and destinations, but not directly to a situation in which differentiation is based on route choices. |
| Keywords: | price differentiation, price discrimination, transport, networks, congestion |
| JEL: | L11 L51 L91 |
| Date: | 2014–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20140099&r=net |
| By: | Daan in 't Veld (University of Amsterdam); Marco van der Leij (University of Amsterdam, and De Nederlandsche Bank, the Netherlands); Cars Hommes (University of Amsterdam, the Netherlands) |
| Abstract: | Recent empirical evidence suggests that financial networks exhibit a core periphery network structure. This paper aims at giving an economic explanation for the emergence of such a structure using network formation theory. Focusing on intermediation benefits, we find that a core periphery network cannot be unilaterally stable when agents are homogeneous. The best-response dynamics converge to a unique unilaterally stable outcome ranging from an empty to denser networks as the costs of linking decrease. A core periphery network structure can form endogenously, however, if we allow for heterogeneity among agents in size. We show that our model can reproduce the observed core periphery structure in the Dutch interbank market for reasonable parameter values. |
| Keywords: | financial networks, core periphery structure, network formation models |
| JEL: | D85 G21 L14 |
| Date: | 2014–07–28 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20140098&r=net |
| By: | Dávid Csercsik (Game Theory Research Group, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and Pázmány Péter Catholic University) |
| Abstract: | Local routing protocols in scale free networks have been extensively studied. In this paper we consider a wireless contextualization of this routing problem and analyze on the one hand how cooperation affects network efficiency, and on the other hand the stability of cooperation structures. Cooperation is interpreted as local exchange of topological information between cooperating agents, and the payoff of a certain node is defined based on its energy consumption during the routing process. We show that if the payoff of the nodes is the energy saving compared to the all-singleton case, basically coalitions are not stable. We introduce coalitional load balancing and net reward to enhance coalitional stability and thus the more efficient operation of the network. As in the proposed model cooperation strongly affects routing dynamics of the network, externalities will arise and the game is defined in a partition function form. |
| Keywords: | partition function form games, networks, local routing |
| JEL: | C71 L14 L96 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:1413&r=net |
| By: | Liu, Ju (CIRCLE, Lund University) |
| Abstract: | This paper explores the influencing mechanism of geographical and organisational proximity/distance on the intra-firm relations and external linkages in multinational companies’ (MNCs) global innovation networks (GINs). It adopts an in-depth case study method and employs social network analysis to study the relational pattern of the case GINs and to understand how the relations are organised and why they are organised in a certain pattern. It is found that the intra-firm relations of both case MNCs’ GINs are similarly organised in a global way. The external linkages in the two case GINs are organised in different ways (global vs local) which depend on the dominant knowledge is science-based or engineering-based. Two influencing mechanisms, namely complementary effect and conditional reinforcing effect, are found and discussed. Evidences in practice are identified. |
| Keywords: | Global innovation network; MNC; Geographical proximity; Organisational proximity; Social network analysis |
| JEL: | D85 F23 L62 L63 |
| Date: | 2014–09–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2014_016&r=net |
| By: | Berliant, Marcus; Watanabe, Hiroki |
| Abstract: | Zipf’s law is one of the best-known empirical regularities in urban economics. There is extensive research on the subject, where each city is treated symmetrically in terms of the cost of transactions with other cities. Recent developments in network theory facilitate the examination of an asymmetric transport network. In a scale-free network, the chance of observing extremes in network connections becomes higher than the Gaussian distribution predicts and therefore it explains the emergence of large clusters. The city-size distribution shares the same pattern. This paper decodes how accessibility of a city to other cities on the transportation network can boost its local economy and explains the city-size distribution as a result of its underlying transportation network structure. |
| Keywords: | Zipf’s law; City-size distribution; Scale-free network |
| JEL: | R12 R40 |
| Date: | 2014–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:59448&r=net |