nep-net New Economics Papers
on Network Economics
Issue of 2015‒02‒28
fifteen papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Dynamics in ICT cooperation networks in selected German ICT clusters By Christian Schröder
  2. Market Dynamics and Indirect Network Effects in Electric Vehicle Diffusion By Zhe Yu ; Shanjun Li ; Lang Tong
  3. Generalized three-sided assignment markets: consistency and the core By Atay, Ata ; Llerena Garrés, Francesc ; Núñez, Marina (Núñez Oliva)
  4. Networks, Shocks, and Systemic Risk By Daron Acemoglu ; Asuman Ozdaglar ; Alireza Tahbaz-Salehi
  5. Tipping in Two-Sided Markets with Asymmetric Platforms By Alex Gold ; Christiaan Hogendorn
  6. The Economic Consequences of Social Network Structure By Jackson, Matthew O. ; Rogers, Brian ; Zenou, Yves
  7. Financial stability from a network perspective By Leon Rincon, C.E.
  8. The Diffusion of Information and Behavior in Social Networks: Renewable Energy Technology Adoption in Rural China By Pan He ; Marcella Veronesi
  9. FDI in China and global production networks: Assessing the role of and impact on big world players (East Asia, Japan, EU28 and U.S.) By Zhou, Jing ; Latorre, María C.
  10. Some Challenges in the Empirics of the Effects of Networks By Vincent Boucher ; Bernard Fortin
  11. Contracting on Networks By Mohamed Belhaj ; Frédéric Deroian
  12. Financial institution network and the certification value of bank loans By Christophe J. GODLEWSKI ; Bulat SANDITOV
  13. Shareholding Network in the Euro Area Banking Market By Nicolò Pecora ; Alessandro Spelta
  14. Boundaries of firms and catching up by latecomers in global production networks : the case of a Mexican auto-parts manufacturer By Hoshino, Taeko
  15. Simulating micro behaviours and structural properties of knowledge networks: toward a “one size fits one” cluster policy By Joan Crespo ; Frédéric Amblard ; Jérôme Vicente

  1. By: Christian Schröder (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW) )
    Abstract: High innovation capability is indispensable for generating economic growth in developed economies. Cooperations in the innovation process are entered into by companies for reasons of risk diversification or costs and often considered to be an efficient strategy to increase a company’s knowledge basis. Regional economic literature very often believes that regional agglomeration of companies, i.e. cluster formation, will also lead to increased local networking, i.e. also to cooperations between companies or between company and research institutes in the innovation process. A social network analysis of the two German ICT regions performed with patent data was able to show that cluster formation coincides with a dynamic increase of cooperations measured by joint patent applications. However, the cooperations are characterized by integration of extra-regional companies and research institutes rather than being intraregional.
    Keywords: Regional science, Cluster, ICT, Knowledge spillover, Social network analysis, Innovation networks
    JEL: L10 O18 L63 L86
    Date: 2013–08
  2. By: Zhe Yu ; Shanjun Li ; Lang Tong
    Abstract: The diffusion of electric vehicles (EVs) is studied in a two-sided market framework consisting of EVs on the one side and EV charging stations (EVCSs) on the other. A sequential game is introduced as a model for the interactions between an EVCS investor and EV consumers. A consumer chooses to purchase an EV or a conventional gasoline alternative based on the upfront costs of purchase, the future operating costs and the availability of charging stations. The investor, on the other hand, maximizes his profit by deciding whether to build charging facilities at a set of potential EVCS sites or to defer his investments. The solution of the sequential game characterizes the EV-EVCS market equilibrium. The market solution is compared with that of a social planner who invests in EVCSs with the goal of maximizing the social welfare. It is shown that the market solution underinvests EVCSs, leading to slower EV diffusion. The effects of subsidies for EV purchase and EVCSs are also considered.
    Date: 2015–02
  3. By: Atay, Ata ; Llerena Garrés, Francesc ; Núñez, Marina (Núñez Oliva)
    Abstract: A class of three-sided markets (and games) is considered, where value is generated by pairs or triplets of agents belonging to different sectors, as well as by individuals. For these markets we analyze the situation that arises when some agents leave the market with some payoff To this end, we introduce the derived market (and game) and relate it to the Davis and Maschler (1965) reduced game. Consistency with respect to the derived market, together with singleness best and individual anti-monotonicity axiomatically characterize the core for these generalized three-sided assignment markets. These markets may have an empty core, but we define a balanced subclass, where the worth of each triplet is defined as the addition of the worths of the pairs it contains. Keywords: Multi-sided assignment market, Consistency, Core, Nucleolus. JEL Classification: C71, C78
    Keywords: Jocs cooperatius, 33 - Economia,
    Date: 2014
  4. By: Daron Acemoglu ; Asuman Ozdaglar ; Alireza Tahbaz-Salehi
    Abstract: This chapter develops a unified framework for the study of how network interactions can function as a mechanism for propagation and amplification of microeconomic shocks. The framework nests various classes of games over networks, models of macroeconomic risk originating from microeconomic shocks, and models of financial interactions. Under the assumption that shocks are small, we provide a fairly complete characterization of the structure of equilibrium, clarifying the role of network interactions in translating microeconomic shocks into macroeconomic outcomes. This characterization enables us to rank different networks in terms of their aggregate performance. It also sheds light on several seemingly contradictory results in the prior literature on the role of network linkages in fostering systemic risk.
    JEL: D85 G01
    Date: 2015–02
  5. By: Alex Gold (Bipartisan Policy Center ); Christiaan Hogendorn (Economics Department, Wesleyan University )
    Abstract: This paper examines tipping in the Armstrong (2006) two-sided market model. By adding simple cost asymmetries to the original model, we show that the model is quite robust to dierences in network size and deviations from 50-50 market share. It well represents situations where asymmetries compensate for one another; for example, one platform might incur marginal costs to court developers and make up for it with lower costs to users. Our tests also make clear that there is an implicit stand-alone utility in the Armstrong model even when it is not specifically modeled. These results improve interpretation of the many studies that use the Armstrong model for policy analysis.
    Date: 2015–02
  6. By: Jackson, Matthew O. ; Rogers, Brian ; Zenou, Yves
    Abstract: We survey the literatures on the economic consequences of the structure of social networks. We develop a taxonomy of 'macro' and 'micro' characteristics of social inter-action networks and discuss both the theoretical and empirical findings concerning the role of those characteristics in determining learning, diffusion, decisions, and resulting behaviors. We also discuss the challenges of accounting for the endogeneity of networks in assessing the relationship between the patterns of interactions and behaviors.
    Keywords: centrality measures; contagion; diffusion; endogeneity; homophily; network formation.; social economics; social learning; Social networks
    JEL: C72 D85 L14 Z13
    Date: 2015–02
  7. By: Leon Rincon, C.E. (Tilburg University, School of Economics and Management )
    Abstract: This thesis consists of six chapters related to applications of network analysis’<br/>methods for financial stability. The first chapter introduces the network perspective as a new mapping technique for studying and understanding financial markets’architecture. The second chapter breaks down the Colombian sovereign securities market into different layers of interaction corresponding to distinct trading and registering platforms. The third chapter addresses an overlooked issue: How to measure the importance of financial market infrastructures within their corresponding network. The fourth chapter studies the connective and hierarchical structure of the Colombian non-collateralized money market, and uses an information retrieval algorithm for identifying those financial institutions that simultaneously excel at borrowing and lending central bank’s liquidity (i.e. superspreaders). The fifth chapter addresses –for the first time- the question regarding the presence of a modular hierarchy in financial networks, and discusses the main implications for financial stability. The sixth chapter explicitly models the role of financial market infrastructures as financial markets’ “plumbing”, and recognizes that traditional analysis of financial institutions networks is of a virtual or logical nature. The third chapter is published in the Journal of Financial Market Infrastructures (Vol.2 (3), 2014), whereas the fourth chapter is published in the Journal of Financial Stability (Vol.15, 2014).
    Date: 2015
  8. By: Pan He (ETH Zurich ); Marcella Veronesi (Department of Economics (University of Verona) )
    Abstract: Adopting renewable energy technologies has been seen as a promising way to reduce CO2 emissions and deforestation. This paper investigates how social networks may affect renewable energy technology adoption. We distinguish two channels through which social networks may play a role: (i) the diffusion of information; and (ii) the diffusion of behavior. Most empirical studies fail to quantitatively separate the diffusion of information and behavior in social networks. We conduct a survey on biogas technology adopting in rural China to identify individuals’ egocentric information networks. We find that both the diffusion of information and behavior drive farmers’ technology adoption. Farmers with larger egocentric information networks and a larger fraction of known adopters are more likely to adopt the biogas technology. In addition, we collect data on several attributes of alters to explore the composition of social networks. We find heterogeneous social network effects across different types of alters. Alters who have close relationships with egos such as friends and relatives or that are trusted by egos affect egos’ adoption through the diffusion of information, while less trusted alters such as government officials affect egos’ adoption through their adoption behavior.
    Keywords: Social networks, renewable energy, technology adoption, information diffusion, behavior diffusion, biogas, China
    JEL: D83 D85 Q55
    Date: 2015–02
  9. By: Zhou, Jing ; Latorre, María C.
    Abstract: This paper analyzes several effects of FDI accruing to Textiles, Chemicals, Electronics and Machinery in China. Though the four sectors have contrasting production technologies and vary largely in trade patterns, the related Chinese exports and imports still follow a general trend: East Asia and Japan are the main intermediate suppliers while the rest of regions play more the role of final markets. The paper describes the networks among big regions, providing their relative importance across different levels (local industry, global industry, host economy and world economy). It also estimates a rich set of regional impacts after the rising FDI inflows.
    Keywords: Multilevel analysis, Globalization, Industrial Organization, MNEs and Economic Growth in Emerging Markets
    JEL: C68 F14 F21
    Date: 2015–02–20
  10. By: Vincent Boucher ; Bernard Fortin
    Abstract: We study some recent developments and challenges in the empirics of the effects of social networks. We focus in particular on researchers’ ability to make policy recommendations based on a standard linear econometric model. We examine the potential compatibility between this type of econometric model and a microeconomic theoretical approach based on fundamentals, such as preferences, technology and decision processes. We discuss sources of identification for the social multiplier as well as for the identity of the key player. We study the possibility of testing endogeneity in network formation. We analyse the use of proxy variables and their impact for the causal interpretation of the peer effect coefficients. Our analysis suggests that greater care should be taken in grounding econometric network models to sound and credible theoretical underpinnings.
    Keywords: Social Networks, Social Multiplier, Network Formation, Identification, Proxy Variables, Policy Analysis
    JEL: A14 C33 C36 D85 Z13
    Date: 2015
  11. By: Mohamed Belhaj (Centrale Marseille (Aix-Marseille School of Economics), CNRS and EHESS ); Frédéric Deroian (Aix-Marseille University (Aix-Marseille School of Economics), CNRS and EHESS )
    Abstract: A principal offers bilateral contracts to a set of agents organized in a network conveying synergies, in a context where agents' efforts are observable and where the principal's objective increases with the sum of efforts. We characterize optimal contracts as a function of agents' positions on the network. The analysis shows that contract enforceability is key to understand optimality. We also examine linear contracting and we analyze the situation where the principal is constrained to contract with a single agent on the network. Last, we extend this setting to network entry.
    Keywords: optimal contracting, multi-agency, Network, Strategic Complementarity, enforceability
    JEL: C72 D85
    Date: 2015–01–12
  12. By: Christophe J. GODLEWSKI (LaRGE Research Center, Université de Strasbourg ); Bulat SANDITOV (Telecom Ecole de Management )
    Abstract: Social networks and reputation are believed to play important roles in mitigating informational frictions related to financial intermediation, in particular bank lending. We investigate the effect of the network and reputation of financial institutions on the certification value of bank loans using data on syndicated loans to European companies. We find that the presence of more central and reputable leaders in a syndicate substantially increases the stock market’s reaction to loan announcements. This certification value is reinforced when informational frictions are more important, but vanishes in case of severe disruptions in the functioning of financial markets, such as during the financial crisis of 2008.
    Keywords: bank loan, syndicated lending, reputation, social network analysis, betweenness centrality, event study, Europe.
    JEL: G21 G24 L14
    Date: 2015
  13. 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
  14. By: Hoshino, Taeko
    Abstract: For manufacturing firms in developing countries, there are high barriers to entry and to catching up with competitors in their global production networks (GPNs). This paper examines the case of a Mexican auto-parts manufacturer that succeeded in catching up in the automotive GPN. The author proposes that the door to GPNs is open thanks to frequent changes in the boundaries of firms, and also stresses the importance of the necessary conditions that generate opportunities, including institutional settings that facilitate market entry and catching up, and capability building by firms hopeful of entry.
    Keywords: Mexico, Automobile industry, Business enterprises, Industrial policy, Exports, Boundary of firms, Global production network (GPN), Auto-parts, ISI, Export industrialization, Nemak, Alfa, Ford
    JEL: L22 L52 L62 N66 N86 O33
    Date: 2015–02
  15. By: Joan Crespo ; Frédéric Amblard ; Jérôme Vicente
    Abstract: The economic return of cluster policies has been recently called into question. Essentially based on a “one size fits all” approach consisting in boosting R&D collaborations and reinforcing network density in regions, cluster policies are suspected to have failed in reaching their objectives. The paper proposes to go back to the micro foundations of clusters in order to disentangle the links between the long run performance of clusters and their structural properties. We use a simple agent-based model to shed light on how individual motives to shape knowledge relationships can give rise to emerging structures with different properties, which imply different innovation and renewal capabilities. The simulation results are discussed in a micro-macro perspective, and the findings suggest reorienting cluster policy guidelines towards more targeted public-funded incentives for R&D collaboration.
    Keywords: cluster policy, networks, micro-behaviours, structural properties, agent-based model
    JEL: B52 O32 R12 Z13
    Date: 2015–02

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