nep-net New Economics Papers
on Network Economics
Issue of 2014‒11‒22
six papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Merger control on two-sided markets: is there need for an efficiency defense? By Edmond Baranes; Thomas Cortade; Andreea Cosnita-Langlais
  2. Shareholding Network in the Euro Area Banking Market By Nicolò Pecora; Alessandro Spelta
  3. E-participation: Social Capital and the Internet By Fabio Sabatini; Francesco Sarracino
  4. Venture Capital Networks and Investment Performance in China By Zhiyang Liu; Zhiqi Chen
  5. Wireless Market Structures and Network Sharing By OECD
  6. On the Core of Directed Acyclic Graph Games By Balázs Sziklai; Tamás Fleiner; Tamás Solymosi

  1. By: Edmond Baranes; Thomas Cortade; Andreea Cosnita-Langlais
    Abstract: We study horizontal mergers on two-sided markets between horizontally differentiated platforms. We provide a theoretical analysis of the merger's price effect based on the amount of cost savings it generates, the behavior of outsider platforms, and the size of cross-group network effects. We point out differences as compared with the standard, one-sided merger analysis, and also discuss the merger control policy implications.
    Date: 2014–11
  2. By: Nicolò Pecora (Università Cattolica del Sacro Cuore); Alessandro Spelta (Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)
    Abstract: Analyzing the topological properties of the network of shareholding relationships among the Euro Area banks we evaluate the relevance of a bank in the ?nancial system respect to ownership and control of other banks. We ?nd that the degree distribution of the European banking network displays power laws in both the binary and the weighted case. We also ?nd that the exponents are linked by a scaling relation revealing a direct connection between an increase of control diversi?cation and an increase of market power. Results also reveal Single Supervisory Mechanism, recently introduced by the European Central Bank and based on banks? total assets is a good proxy for the systemic risk associated to a particular ?nancial institution. Moreover we study how control and wealth are structured and concentrated within the banking system. Interestingly, our analysis reveals that control is highly concentrated at banking level, namely, lying in the hands of very few important shareholders that have weak relationships between them. This means that each main holder controls approximately a separate subset of banks.
    Keywords: Shareholding network, European banking system, Weighted graph, Power law
    JEL: D85 E58 L14
    Date: 2014–06
  3. By: Fabio Sabatini (Department of Economics and Law, Sapienza University of Rome (Italy) and Laboratory for Comparative Social Research (LCSR), National Research University Higher School of Economics, Moscow and Saint Petersburg (Russia)); Francesco Sarracino (Institut National de la Statistique et des Études Économiques du Grand-Duché du Luxembourg (STATEC), Laboratory for Comparative Social Research (LCSR), National Research University Higher School of Economics, Moscow and Saint Petersburg (Russia))
    Abstract: Studies in the social capital literature have documented two stylised facts: first, a decline in measures of social participation has occurred in many OECD countries. Second, and more recently, the success of social networking sites (SNSs) has resulted in a steep rise in online social participation. Our study adds to this body of research by conducting the first empirical assessment of how online networking affects two economically relevant aspects of social capital, i.e. trust and sociability. We address endogeneity in online networking by exploiting technological characteristics of the pre-existing voice telecommunication infrastructures that exogenously determined the availability of broadband for high-speed Internet. We find that participation in SNSs such as Facebook and Twitter has a positive effect on face-to-face interactions. However, social trust decreases with online interactions. We argue that the rising practice of hate speech may play a crucial role in the destruction of trust
    Keywords: Social Participation, Online Networks, Facebook, Social Trust, Social Capital, Broadband, Digital Divide, Hate Speech
    JEL: C36 D85 O33 Z1
    Date: 2014–10
  4. By: Zhiyang Liu (Shanghai University of Finance and Economics); Zhiqi Chen (Department of Economics, Carleton University)
    Abstract: We investigate the relationship between venture capital (VC) networks and investment performance in China. Distinct features of China’s VC networks are captured in our econometric model through the inclusion of an index of network stability and a dummy variable that indicates a VC firm’s connections with the Chinese state. Our econometric analysis shows that a VC firm’s position in its network, its network stability and close connections with the state all contribute to its investment performance. Comparison with the findings in Hochberg et al. (2007) indicates that networks are more important for investment performance in China than in the US. Moreover, our analysis suggests that familiarity with local culture and customs and understanding of the idiosyncrasies of China’s markets and institutions are important for the success of a VC firm in China.
    Keywords: Venture capital; Networks; Investment performance; China
  5. By: OECD
    Abstract: A key issue for policy makers and regulators across the OECD area is the market structures that will best deliver efficient and inclusive mobile communication services. This has led to two issues addressed in this report, namely: the recent experience in selected countries, which have changed or held constant the number of facilities based operators; and the initial experience and key questions that have arisen with wireless network sharing. These questions are related because they converge around the issue of how many facilities-based networks are optimal in providing competitive services in the same geographical location. In all OECD countries there are at least three mobile network operators (MNOs), which broadly compete on a national basis, with some countries having four or five facilities-based networks operating nationally or in the same region. Historically, the coverage and capabilities of these networks have been important factors used by operators to differentiate their offers and attract customers. Nonetheless, sharing the expense of network facilities between multiple MNOs can significantly reduce costs, especially at a time when there are demands on operators to roll out new networks or extend coverage.
    Date: 2014–11–06
  6. By: Balázs Sziklai (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Tamás Fleiner (Department of Computer Science and Information Theory, Budapest University of Technology and Economics); Tamás Solymosi (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)
    Abstract: There lies a network structure between fixed tree and minimum cost spanning tree networks that has not been previously analyzed from a cooperative game theoretic perspective, namely, directed acyclic graph (DAG) networks. In this paper we consider the cost allocation game defined on DAG-networks. We briefly discuss the relation of DAG-games with other network-based cost games. We demonstrate that in general a DAG-game is not concave, even its core might be empty, but we provide an efficiently verifiable condition satisfied by a large class of directed acyclic graphs that is sufficient for balancedness of the associated DAG-game. We introduce a network canonization process and prove various structural results for the core of canonized DAG-games. In particular, we characterize classes of coalitions that have a constant payoff in the core. In addition, we identify a subset of the coalitions that is sufficient to determine the core.
    Keywords: cooperative game theory, directed acyclic graphs, core, acyclic directed Steiner tree
    JEL: C71
    Date: 2014–07

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