|
on Network Economics |
| By: | A. Berthou; H. Ehrhart |
| Abstract: | This paper provides new empirical evidence regarding the formation of international trade networks. We test whether trade experience in a given country can generate new trade opportunities with other countries, and investigate the role played by geographical and political factors. We address the issue of the endogeneity in the formation of trade networks by using the experience of ancient trade linkages between former colonies and their former colonizers (colonial trade linkages). We firstly show, using aggregate trade data, that former colonies have more trade with countries being geographically more proximate or having more trade with the former colonizer (colonial trade spillovers). We then show that the microeconomic dynamics of former colonies’ exports and imports at the product level is significantly influenced by the geographical proximity between trade partners and the former colonizer, or their degree of economic integration. These results are consistent with the predictions from models of trade networks (Chaney2014). Overall, they confirm that the microeconomic dynamics of trade contribute to shape the cross-sectional distribution of aggregate trade flows across countries. |
| Keywords: | International trade dynamics, networks formation, colonies. |
| JEL: | F14 F15 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:526&r=net |
| By: | Peitz, Martin; Valletti, Tommaso |
| Abstract: | Central features of today's electronic communications markets are complementarities between the different layers of the value chain, substitutability between some applications, network effects in the provision of content and services, two-sided business models that partly involve indirect revenue generation (such as advertising and data profiling), and a patchwork of regulated and unregulated segments of the market. This complexity requires a fresh look at the market forces shaping the industry and a rethinking of market definitions and of the assessment of market power. This article presents the state of play in European electronic communication markets, with a particular emphasis on the recent development of 'over the tops'. We also use a stylised model of an electronic communications market to draw some central lessons from economic theory and to elaborate on market definition and market power. |
| Keywords: | telecommunications,OTT,relevant market,two-sided markets,market power |
| JEL: | D82 L13 L41 L51 L86 L96 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:14101&r=net |
| By: | Frigant, Vincent; Zumpe, Martin |
| Abstract: | In this paper, we examine the structure and the evolution of international exchanges of auto parts over the 2000-2012 period for four European countries. The first part of our study reviews the literature and points out four stylized facts about the geography of automotive supply networks. In section 2 we propose an analysis of the organisation of automotive supply chains based on the global production networks framework. We give details about this approach by stating the nature of trade flows that occur in these networks, and by highlighting the importance of intra-firms flows. In the third part, we compare the structure of external GPNs of German, Spanish, British and French automotive firms located in these countries. On the basis of Chelem data about auto parts exchanges, we examine in a comparative way the evolution of intra-continental and intercontinental flows. Our results highlight the heterogeneity of situations and of trajectories in the different countries. |
| Keywords: | Global Production Networks; Automotive industry; International Comparison; Auto-parts industry; Regional integration; Globalisation |
| JEL: | F14 F15 F23 L62 R11 |
| Date: | 2014–11–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:60199&r=net |
| By: | Li, Dan; Schürhoff, Norman |
| Abstract: | Dealers in over-the-counter securities form networks to mitigate search frictions. The audit trail for municipal bonds shows the dealer network has a core-periphery structure. Central dealers are more efficient at matching buyers and sellers than peripheral dealers, which shortens intermediation chains and speeds up trading. Investors face a tradeoff between execution speed and cost. Central dealers provide immediacy by pre-arranging fewer trades and holding larger inventory. However, trading costs increase strongly with dealer centrality. Investors with strong liquidity need trade with central dealers and at times of market-wide illiquidity. Central dealers thus serve as liquidity providers of last resort. |
| Keywords: | decentralization; immediacy; liquidity; market quality; municipal bonds; network analysis; over-the-counter financial market; trading cost; transparency |
| JEL: | G12 G14 G24 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10237&r=net |
| By: | JANSSENS, Jochen; TALARICO, Luca; SÖRENSEN, Kenneth |
| Abstract: | Real-life utility networks such as smart grids, pipelines and water networks can be exposed to safety and security related risk. Preventative measures can be applied to mitigate such risks that may result in service interruptions for the users of these networks. An index of (dis)connectivity, that measures how many users will be affected by a network failure, is defined and embedded into a model aimed at increasing security in a utility network. The model proposed in this paper assumes that all edges (e.g. pipes, cables) and nodes (e.g. switching- or connection stations, substations in an electricity network) have a certain probability of failing (due to external attacks), which can be reduced by taking appropriate security strategies. It then determines the security strategies that should be taken to minimize the probability of disconnecting any node from any other node. We propose a metaheuristic approach to solve this problem. Detailed experiments on realistic instances are conducted and the relationship between solutions and problem parameters are tested by simulating different scenarios. |
| Keywords: | Network security, Metaheuristics, Knapsack problem |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:ant:wpaper:2014028&r=net |
| By: | Gandal, Neil; Stettner, Uriel |
| Abstract: | Product development within and across community-based and geographically dispersed virtual organizations is becoming an increasingly important mechanism through which individual knowledge holders create and disseminate knowledge in joint efforts to generate products. Without the benefits of face-to-face communication, such organizations face a particular set of constraints in their exposure to knowledge and know-how. This “liability of dispersion” increases the importance of the architecture of network ties that undergird the distinct development efforts, the embedded social structures, and the particular relationships involved in their product-generating efforts. In this paper, we examine whether particular network structures foster knowledge transfer among distinct open-source projects. We conjecture that Star developers—actors characterized by increasing levels of embeddedness and the associated ability to form ties with several projects within a network—serve boundary-spanning functions that facilitate an organization’s ability to collect, assimilate, and apply external information. We find support for this conjecture in our investigation of a network of open-source software projects and developers compiled from a dataset drawn from Sourceforge.net. We also show that becoming part of a giant network component is associated with relatively large changes in project performance. |
| Keywords: | exploitation; exploration; Knowledge Spillovers; Network Dynamics; Open Source; social capital; Social Network |
| JEL: | L8 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9980&r=net |
| By: | Karna, Amit; Florian A. Taeube; Petra Sonderegger |
| Abstract: | The organization of geographic clusters plays an increasingly significant role due to the presence of network ties that exist within the location and beyond. This has proven to be particularly true for knowledge-intensive industries, where the organization of resources – people and technology – has been a primary driver for firm and regional performance. With the help of a longitudinal case study of the IT cluster in Bangalore (India), we investigate the effect of local and non-local network ties on its evolution. We argue that local and non-local networks play a clear role in cluster evolution. We propose a U-shaped relationship between cluster evolution phases and the distance among the network tie members. Our study also outlines the role that embedding, expansion, and extension of ties plays in transitioning cluster from one phase to the other. The consideration of non-local ties is rather nascent in the cluster literature and promises to enhance the understanding of how clusters develop at both levels - policy as well as firm. |
| URL: | http://d.repec.org/n?u=RePEc:iim:iimawp:13084&r=net |
| By: | Nikolas Tsakas (Singapore University of Technology and Design and Universidad Carlos III de Madrid) |
| Abstract: | We study a problem of optimal influence in a society where agents learn from their neighbors. We consider a firm that seeks to maximize the diffusion of a new product whose quality is ex–ante uncertain, to a market where consumers are able to compare the qualities of two alternative products as soon as they observe both of them. The firm can seed the product to a subset of the population and our goal is to find which is the optimal subset to target. We provide a necessary and sufficient condition that fully characterizes the optimal targeting strategy for any network structure. The key parameter in this condition is the agents’ decay centrality, which is a measure that takes into account how close an agent is to others, but in a way that very distant agents are weighted less than closer ones. |
| Keywords: | Social Networks, Targeting, Diffusion, Observational Learning. |
| JEL: | D83 D85 H23 M37 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:cst:wpaper:4&r=net |
| By: | Haydée Lugo (Departamento de Fundamentos del Análisis Económico II (Economía Cuantitativa) (Department of Foundations of Economic Analysis II (Quantitative Economics)), Facultad de Ciencias Económicas y Empresariales (Faculty of Economics and Business), Universidad Complutense de Madrid (Complutense University of Madrid)); Maxi San Miguel (IFISC (CSIC-UIB), Campus Universitat de les Illes Balears, 07122 Palma de Mallorca, Spain) |
| Abstract: | We introduce a two layer network model for social coordination incorporating two relevant ingredients: a) different networks of interaction to learn and to obtain a pay-off, and b) decision making processes based both on social and strategic motivations. Two populations of agents are distributed in two layers with intralayer learning processes and playing interlayer a coordination game. We find that the skepticism about the wisdom of crowd and the local connectivity are the driving forces to accomplish full coordination of the two populations, while polarized coordinated layers are only possible for all-to-all interactions. Local interactions also allow for full coordination in the socially efficient Pareto-dominant strategy in spite of being the riskier one |
| Keywords: | Doubt-based decisions, Coordination games, Multilayer network. |
| JEL: | D69 D79 C63 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ucm:doicae:1430&r=net |
| By: | De Martí, Joan; Zenou, Yves |
| Abstract: | We consider a network game with strategic complementarities where the individual reward or the strength of interactions is only partially known by the agents. Players receive different correlated signals and they make inferences about other players' information. We demonstrate that there exists a unique Bayesian-Nash equilibrium. We characterize the equilibrium by disentangling the information effects from the network effects and show that the equilibrium effort of each agent is a weighted combinations of different Katz-Bonacich centralities where the decay factors are the eigenvalues of the information matrix while the weights are its eigenvectors. We then study the impact of incomplete information on a network policy which aim is to target the most relevant agents in the network (key players). Compared to the complete information case, we show that the optimal targeting may be very different. |
| Keywords: | Bayesian games; key player policies; social networks; strategic complementarities |
| JEL: | C72 D82 D85 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10290&r=net |
| By: | Comola, Margherita (Paris School of Economics); Prina, Silvia (Case Western Reserve University) |
| Abstract: | A large literature has studied how peers affect behavior by exploiting the preexisting social network structure only. What if networks rewire in response to changes in the economic environment, such as a randomized intervention? We exploit a unique panel dataset that contains detailed information on the network of informal financial transactions before and after a field experiment that randomized access to savings accounts in Nepal. First, we show that the intervention affects the structure of the network of informal financial transactions among households. Second, we estimate a panel model of peer effects in expenditure where the network may change endogenously, and we exploit the design of the randomized intervention to instrument for the observed network change. Our results suggest that disregarding the network change would underestimate both total peer effects and the overall impact of the intervention. |
| Keywords: | networks, peer effects, financial access |
| JEL: | C31 D85 G2 O16 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8641&r=net |