nep-net New Economics Papers
on Network Economics
Issue of 2015‒03‒22
twelve papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Can a Platform Make Profit with Consumers' Mobility? A Two-Sided Monopoly Model with Random Endogenous Side-Switching By Pierre ANDREOLETTI; Pierre GAZE; Maxime MENUET
  2. Behaviour Based Price Discrimination with Cross-Group Externalities By Elias Carroni
  3. Some Challenges in the Empirics of the Effects of Networks By Boucher, Vincent; Fortin, Bernard
  4. Innovation through Networking: The Case of the Agricultural Sector By Lambrecht, Evelien; Kühne, Bianka; Gellynck, Xavier
  5. Investments in Water Networks: A Normative Analysis of Local Public Utilities By Alberto Cavaliere; Mario Maggi; Francesca Stroffolini
  6. Randomizing bipartite networks: the case of the World Trade Web By Fabio Saracco; Riccardo Di Clemente; Andrea Gabrielli; Tiziano Squartini
  7. Spatial vs. Social Network Effects in Risk Sharing By Aida, Takeshi
  8. Network proximity in the geography of research collaboration By Laurent R. Bergé; Frank van Oort
  9. Factors Influencing the Performance of German Food SME Formal Networks By Deiters, Jivka; Heuss, Esther; Schiefer, Gerhard
  10. Growth and Human Capital: A Network Approach By Cavalcanti, Tiago; Giannitsarou, Chryssi
  11. Business Collaboration in Food Networks: Incremental Solution Development By Sundmaeker, Harald
  12. Court-ship, Kinship and Business: A Study on the Interaction between the Formal and the Informal Institutions and Its Effect on Entrepreneurship By Chakraborty, Tanika; Mukherjee, Anirban; Saha, Sarani

  1. By: Pierre ANDREOLETTI; Pierre GAZE; Maxime MENUET
    Date: 2015
  2. By: Elias Carroni (CERPE, University of Namur)
    Abstract: This paper analyses the practice of firms to offer different prices to consumers according to the past purchase behaviour (BBPD) in the context of two-sided markets. In a two-period model, two platforms compete for heterogeneous firms and consumers. Platforms are allowed to discriminate prices on the consumers’ side according to their past purchase behaviour. When first-period market shares are taken as given, the presence of exter- nalities makes two-direction switching less likely compared to the case of a one-sided market. Second-period competition is strengthened compared to the case in which a uniform price is charged in both sides, whereas in the first period it is relaxed if firms exhibit weaker externalities than consumers, intensified otherwise. The overall effect on inter-temporal profits of platforms is negative, confirming the previous results of BBPD literature.
    Keywords: Behaviour-Based Price Discrimination, Two-Sided Markets
    JEL: L1 D4
    Date: 2015–02
  3. By: Boucher, Vincent (Université Laval); Fortin, Bernard (Université Laval)
    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: 2015–02
  4. By: Lambrecht, Evelien; Kühne, Bianka; Gellynck, Xavier
    Abstract: Innovation is widely recognized as being an important strategic tool for companies to increase their competitive advantage. Hereby, networks have become increasingly important as external sources for the necessary knowledge, ideas and financial resources. The main contribution of this paper is to shed light on how different network partners can explain or facilitate the different types of innovations in the agricultural sector. In contrast to other studies, we make a distinction between all four types of innovation: product, process, marketing and organizational innovation. Thus, this study has the objective to gain insight into the innovation process of farmers in terms of how they innovate, which network partners they consult in relation to innovation type, the obstacles they face, and where the network activities could be better aligned with the needs of the farmers, which could help to enable them to optimally support innovation and networking. The study is based on 36 in-depth interviews with farmers spread over five subsectors in Flanders (northern Belgium). Our most important findings are that the consulted partners and the observed barriers are different dependent on the innovation type. Hence, our study delivers a set of valuable insights and implications for farmers, network coordinators and policymakers. Farmers must be aware of the importance of partner suitability and network heterogeneity for the innovation type they are aiming at. Furthermore, farmers have to be aware of the fact that efficient networking is not the optimisation of single relationships independently of each other, but instead the management of synergies and coordination of all relationships in an efficient way. In addition, network coordinators should set up a clear strategy and communicate for which innovations their network can advise and help the farmer. These first conclusions should be further proven and supported by future research in order to draw general conclusions for the agricultural sector. As the sample of our study is limited to 36 respondents spread over five subsectors, it is necessary to conduct a quantitative study to achieve a representable sample and to include more subsectors. In addition, the study is limited to the Flemish region and literature in other countries about this subject is scarce. Hence, other researchers are encouraged to investigate if the results of Flanders can be supported by other regions in Europe and the world.
    Keywords: Farmers, network, innovation, Flanders, qualitative research, Agribusiness,
    Date: 2014–10
  5. By: Alberto Cavaliere (Department of Economics and Management, University of Pavia); Mario Maggi (Department of Economics and Management, University of Pavia); Francesca Stroffolini (Universit`a di Napoli, Federico II)
    Abstract: We analyze rehabilitation investments in a regulated water industry with perfectly inelastic demand. We compare alternative organizational solutions for local provision (municipalization, corporatization and privatization), though subject to a common regulatory mechanism. We can then assess the effects of incentive regulation in public firms and find that even benvolent politicians always stick to the price-cap, in order to save on distortionary taxation. How- ever, incentives to invest result to be excessive only in private firms, as the cost of capital is accounted differently by public and private undertakings. We also provide a theory of mixed firms, based on strategic interaction be- tween politicians and managers, which contributes to endogenously explain partial privatization and minority participation by private stockholders. In this last case incentives to invest appear to be driven just by governance and ownership reasons.
    Keywords: price-cap regulation, mixed firms, partial privatization, water networks, inelastic demand, natural monopoly
    JEL: H42 L32
    Date: 2015–03
  6. By: Fabio Saracco; Riccardo Di Clemente; Andrea Gabrielli; Tiziano Squartini
    Abstract: Within the last fifteen years, network theory has been successfully applied both to natural sciences and to socioeconomic disciplines. In particular, bipartite networks have been recognized to provide a particularly insightful representation of many systems, ranging from mutualistic networks in ecology to trade networks in economy, whence the need of a pattern detection-oriented analysis in order to identify statistically-significant structural properties. Such an analysis rests upon the definition of suitable null models, i.e. upon the choice of the portion of network structure to be preserved while randomizing everything else. However, quite surprisingly, little work has been done so far to define null models for real bipartite networks. The aim of the present work is to fill this gap, extending a recently-proposed method to randomize monopartite networks to bipartite networks. While the proposed formalism is perfectly general, we apply our method to the binary, undirected, bipartite representation of the World Trade Web, comparing the observed values of a number of structural quantities of interest with the expected ones, calculated via our randomization procedure. Interestingly, the behavior of the World Trade Web in this new representation is strongly different from the monopartite analogue, showing highly non-trivial patterns of self-organization.
    Date: 2015–03
  7. By: Aida, Takeshi
    Abstract: Although substantial research has been conducted on informal consumption smoothing mechanisms within villages, or within social clusters such as family and friends, few studies have compared the effects of these spatial and social networks. Employing spatial panel econometric models, this study extends the conventional empirical test of the full risk-sharing hypothesis to incorporate spatial and social network effects, and quantifies the diffusion of income shocks in each network. Estimation results based on household survey data in Southern Sri Lanka show that consumption smoothing performs better in spatial networks than in social ones, because income shocks defuse more effectively among neighboring households. This study also shows the limitations of the conventional test when it is considered a special case of a spatial econometric model.
    Keywords: risk sharing , network , kinship , spillover effect
    Date: 2015–03–09
  8. By: Laurent R. Bergé; Frank van Oort
    Abstract: This paper deals with the questions of how network proximity influences the structure of inter-regional collaborations and how it interacts with geography. I first introduce a new, theoretically grounded measure of inter-regional network proximity. Then, I use data on European scientific co-publications in the field of chemistry between 2001 and 2005 to assess those questions. The main findings reveal that inter-regional network proximity is important in determining future collaborations but its effect is mediated by geography. Most importantly, a clear substitution pattern is revealed showing that network proximity benefits mostly international collaborations.
    Keywords: network proximity, gravity model, research collaboration, network formation, co-publication
    JEL: D85 O31 R12
    Date: 2015–03
  9. By: Deiters, Jivka; Heuss, Esther; Schiefer, Gerhard
    Abstract: The food sector in Europe can be characterised as a complex, global and dynamically changing network of trade streams, food supply network relations and related product flows and offers a big spectrum for economic output and employment. Innovation isimportant for the competitivenessof the food industry that is to a large extent comprised by small and medium sized enterprises (SMEs). Furthermore innovation has grown extremely subordinate to interaction in networks. Network initiatives that could provide appropriate support involve social interaction and knowledge exchange, learning and competence development, and coordination (organization) and management of implementation. This paper was designed to assess the factors that affect the performance of German food SME formal networks. It also addressed the consequences at the network and macro level. The analysis was explored by using the laddering technique based on means-end chain theory. These findings will help to build up a “network learning toolbox” that is adapted to the particular requirements of the different segments of the target group of SMEs, network managers and policy makers. The “network learning toolbox” should improve the network learning, which drives to raised innovation, economic growth and sustainable competitive advantage for food SMEs.
    Keywords: Factors, performance, networks, food, Agribusiness,
    Date: 2014–10
  10. By: Cavalcanti, Tiago; Giannitsarou, Chryssi
    Abstract: We study the interactions and dynamics of human capital, growth and inequality by explicitly embedding networks into a standard endogenous growth model with overlapping generations. The human capital of a household depends on investment in education and on average human capital of the household's network neighborhood. Network structure is crucial for both the long run outcomes and the transition of otherwise identical economies. Network cohesion above a certain threshold eliminates differences across households and leads to long run equality, while below the threshold, inequality is high and persists more often. During transition, (i) high overall growth is achieved when the network has high degree centralization and the most degree central node has high initial human capital and (ii) high individual household growth is achieved when the household has low human capital relative to its neighborhood and is located in a neighborhood that has high average human capital relative to the whole economy.
    Keywords: growth; human capital; inequality; local externality; networks
    JEL: D62 D85 E24 O40
    Date: 2015–03
  11. By: Sundmaeker, Harald
    Abstract: The paper will present an approach for an incremental solution development that is based on the usage of the currently developed Internet based FIspace business collaboration platform. Key element is the clear segmentation of infrastructures that are either internal or external to the collaborating business entity in the food network. On the one hand, the approach enables to differentiate between specific centralised as well as decentralised ways for data storage and hosting of IT based functionalities. The selection of specific data exchange protocols and data models is facilitated. On the other hand, the supported solution design and subsequent development is focusing on reusable “software Apps” that can be used on their own and are incorporating a clear added value for the business actors. It will be outlined on how to push the development and introduction of Apps that do not require basic changes of the existing infrastructure. The paper will present an example that is based on the development of a set of Apps for the exchange of product quality related information in food networks, specifically addressing fresh fruits and vegetables. It combines workflow support for data exchange from farm to retail as well as to provide quality feedback information to facilitate the business process improvement. Finally, the latest status of the FIspace platform development will be outlined. Key features and potential ways for “real users and software developers” in using the FIspace platform that is initiated by science and industry will be outlined.
    Keywords: Business Collaboration, Food Networks, App Development, FIspace, Future Internet, Fruits & Vegetables, Agribusiness,
    Date: 2014–10
  12. By: Chakraborty, Tanika (Indian Institute of Technology Kanpur); Mukherjee, Anirban (University of Calcutta); Saha, Sarani (Indian Institute of Technology Kanpur)
    Abstract: In this paper we theoretically and empirically examine how the interaction between the formal court system and the informal loan network affects a household's decision to start a business. We find that when the formal court system is weak, expansion of informal credit network leads to the proliferation of business. However, with a sufficiently strong court system, expansion of credit network has a negative effect on business prospects. This result is explained by the contradictions between formal laws and norms used by informal networks. Our result remains robust after controlling for a variety of household and district level characteristics.
    Keywords: informal network, court, formal institution, entrepreneurship
    JEL: K12 L26 O17
    Date: 2015–02

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