nep-net New Economics Papers
on Network Economics
Issue of 2015‒02‒16
eight papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Instability And Network Effects In Innovative Markets By Paolo Sgrignoli; Elena Agliari; Raffaella Burioni; Augusto Schianchi
  2. Are commercial ceilings appropriate for the regulation of commercial overload on free-to-air TV channels? By Rothbauer, Julia; Sieg, Gernot
  3. Alternatives to network neutrality: A South African perspective By Potgieter, Petrus H.
  4. Spillovers in networks of user generated content: Pseudo-experimental evidence on Wikipedia By Kummer, Michael
  5. Incomplete Information and Financial Networks By Alireza Tahbaz-Salehi; Jennifer La'O
  6. Estimating topological properties of weighted networks from limited information By Giulio Cimini; Tiziano Squartini; Andrea Gabrielli; Diego Garlaschelli
  7. Cooperation and Expectations in Networks Evidence from a Network Public Good Experiment in Rural India By Marcel Fafchamps; A. Stefano Caria
  8. The impact of implementation of a modular platform strategy in automobile manufacturing networks. By Jesús F. Lampón; Pablo Cabanelas; Javier González Benito

  1. By: Paolo Sgrignoli (Department of Economics (University of Verona)); Elena Agliari (University of Parma); Raffaella Burioni (University of Parma); Augusto Schianchi (University of Parma)
    Abstract: We consider a network of interacting agents and we model the process of choice on the adoption of a given innovative product by means of statistical mechanics tools. The modelization allows us to focus on the effects of direct interactions among agents in establishing the success or failure of the product itself. Mimicking real systems, the whole population is divided into two sub-communities called, respectively, Innovators and Followers, where the former are assumed to display more influence power. We study in detail and via numerical simulations on a random graph two different scenarios: no-feedback interaction, where innovators are cohesive and not sensitively affected by the remaining population, and feedback interaction, where the influence of followers on innovators is non negligible. The outcomes are markedly different: in the former case, which corresponds to the creation of a niche in the market, Innovators are able to drive and polarize the whole market. In the latter case the behavior of the market cannot be definitely predicted and become unstable. In both cases we highlight the emergence of collective phenomena and we show how the final outcome, in terms of the number of buyers, is affected by the concentration of innovators and by the interaction strengths among agents.
    Keywords: Innovation diffusion, Agent-based, Collective phenomena, Innovators, Random network
    JEL: D85 O31 O32
    Date: 2014–09
  2. By: Rothbauer, Julia; Sieg, Gernot
    Abstract: Commercial ceilings not only restrict broadcasters in their decisions about commercial broadcasting time, but also affect their differentiation of program content. This study examines the welfare effects of commercial ceilings in a two-sided free-to-air TV market, taking into account welfare with respect to content differentiation. We identify a second-best commercial ceiling that maximizes welfare in the absence of enforceable program content regulation and identify the situations in which laissez faire is optimal. The deregulation of commercial broadcasting can improve welfare, even if the laissez-faire level of commercial broadcasting time is excessive.
    JEL: L82 M38 D61
    Date: 2014
  3. By: Potgieter, Petrus H.
    Abstract: The debate on network neutrality over the past decade has evolved (in the academic sphere but not so much in public) to include sophisticated considerations of the welfare enhancing or reducing effects of mandating network neutrality. For example, in a model by Economides and Hermalin (2012) it can be shown mathematically that among what they term the \feasible discrimination schemes," it will be the case that network neutrality is welfare enhancing. Other authors, often by looking at the European market, have argued against ex ante regulation of network neutrality Crocioni (2011) and have pointed out other dangers inherent in the mandating of network neutrality Yoo (2005). The issue is in the public eye and has, at the time of writing, lead to occasional (\Save our Internet!") street protests in various places. Similarly to Bauer and Obar (2014), this paper suggests a mix of policies and interventions might be the most appropriate way of addressing the concerns raised by activists and industry analysts in the discussion of discrimination on the last-mile network. Our preference is for an approach that can be easily understood by consumers; allows for relatively simple welfare and competition enhancing regulation and allows for the greatest possible degree of freedom for service providers to invest and to pursue their commercial interests.
    Date: 2014
  4. By: Kummer, Michael
    Abstract: I quantify spillovers of attention in a network of content pages, which is challenging, because such networks form endogenously. I exploit exogenous variation in the article network of German Wikipedia to circumvent this problem. Wikipedia prominently advertises one featured article on its main site every day, which increases viewership of the advertised article. Shifts in the viewership of adjacent articles are due to their link from the treated article. Through this approach I isolate how the link network causally influences users' search and contribution behavior. I use a difference-in-differences analysis to estimate how attention spills to neighbors through the transient shock of advertisement. I further develop an extended peer effects model which relaxes the requirement of an exogenously given network. This model enables the estimation of the underlying spillover. Advertisements affect neighboring articles substantially: Their viewership increases by almost 70 percent. This, in turn, translates to increased editing activity. Attention is the driving mechanism behind views and short edits. Both outcomes are related to the order of links, while more substantial edits are not.
    Keywords: Social Media,Information,Knowledge,Spillovers,Networks,Natural Experiment
    JEL: L17 D62 D85 D29
    Date: 2014
  5. By: Alireza Tahbaz-Salehi (Columbia Business School); Jennifer La'O (Columbia University)
    Abstract: This paper studies the effect of incomplete information within a banking network. Banks are arranged in a network of claims. Claims are held either by other banks in the network or outside depositors. Within this framework, we analyze how incomplete information about the viability of bank assets affects the fragility of the banking system. In particular, we show that fluctuations in expectations and higher-order beliefs can be amplified and lead to systemic risk. Fragility depends both on the topology of the network as well as the structure of higher-order beliefs. Our results have implications for banking policy as well as the social value of stress tests.
    Date: 2014
  6. By: Giulio Cimini; Tiziano Squartini; Andrea Gabrielli; Diego Garlaschelli
    Abstract: A fundamental problem in studying and modeling economic and financial systems is represented by privacy issues, which put severe limitations on the amount of accessible information. Here we introduce a novel, highly nontrivial method to reconstruct the structural properties of complex weighted networks of this kind using only partial information: the total number of nodes and links, and the values of the strength for all nodes. The latter are used as fitness to estimate the unknown node degrees through a standard configuration model. Then, these estimated degrees and the strengths are used to calibrate an enhanced configuration model in order to generate ensembles of networks intended to represent the real system. The method, which is tested on real economic and financial networks, while drastically reducing the amount of information needed to infer network properties, turns out to be remarkably effective$-$thus representing a valuable tool for gaining insights on privacy-protected socioeconomic systems.
    Date: 2014–09
  7. By: Marcel Fafchamps; A. Stefano Caria
    Abstract: We play a one-shot public good game in rural India between farmers connected to an exogenous star network.  Contributions by the centre of the star reach more players and have a larger impact on aggregate payoffs than contributions by the spoke players.  Yet, we find that the centre player contributes just as much as the average of the spokes.  We elicit expectations about the decisions of the centre player and, in randomly selected sessions, we disclose the average expectation of the farmers in the network.  Farmers match the disclosed values frequently and do so more often when the monetary cost of making a contribution is reduced.  However, disclosure is not associated with higher contributions.  Our results support the predictions of a model of other-regarding preferences where players care about the expectations of others.  This model is helpful to understand barriers to improvement in pro-social behaviour when groups expect low pro-sociality.
    Date: 2014–12–06
  8. By: Jesús F. Lampón; Pablo Cabanelas; Javier González Benito
    Abstract: This paper explores the impact of the implementation of modular platforms, to replace the standard platforms used to date, on the strategic outputs of automobile manufacturing networks. Analysis of the production network of manufacturers in Europe shows that the use of modular architecture improves the coordination of manufacturing networks by increasing manufacturing mobility and thriftiness ability. The changes resulting from this new modular strategy also allow for reorganisation of manufacturing capacity and the partial elimination of current overcapacity. From the point of view of production systems, the adaptation of processes and facilities in manufacturing plants to this new architecture should aim to increase flexibility by integrating production around a single platform, allowing for different dimensions and a large number of models in a single plant.
    Keywords: Modular platforms, manufacturing networks, operational flexibility, economies of scale, economies of scope, automobile sector.
    JEL: L62 L23 L25
    Date: 2015–02

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