nep-net New Economics Papers
on Network Economics
Issue of 2015‒03‒27
ten papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Buyer-Seller Relationships in International Trade: Do Your Neighbors Matter? By Fariha Kamal and Asha Sundaram
  2. How to Measure Interconnectedness between Banks, Insurers and Financial Conglomerates? By G. Hauton; J.-C. Héam
  3. Comparative analysis of the engagement rate on Facebook and Google Plus social networks By Tudor Niciporuc
  4. Trends of Korean technology convergence research: the network analysis focusing on the patent co-classification in Korea and US By Yong-gook Bae; Young-Hyun Jin
  5. An Attempt to Disperse the Italian Interlocking Directorship Network: Analyzing the Effects of the 2011 Reform By Carlo Drago; Roberto Ricciuti; Paolo Santella
  6. Too interconnected to fail: A survey of the interbank networks literature By Hüser, Anne-Caroline
  7. Input Diffusion and the Evolution of Production Networks By Carvalho, Vasco M; Voigtländer, Nico
  8. Network formation with value heterogeneity: centrality, segregation and adverse effects By Andreas Bjerre-Nielsen
  9. Urban Social Structure, Social Capital and Spatial Proximity By Patacchini, Eleonora; Picard, Pierre M; Zenou, Yves
  10. Ownership networks and aggregate volatility By Lorenzo Burlon

  1. By: Fariha Kamal and Asha Sundaram
    Abstract: Using confidential U.S. customs data on trade transactions between U.S. importers and Bangladeshi exporters between 2002 and 2009, and information on the geographic location of Bangladeshi exporters, we show that the presence of neighboring exporters that previously transacted with a U.S. importer is associated with a greater likelihood of matching with the same U.S. importer for the first time. This suggests a role for business networks among trading firms in generating exporter-importer matches. Our research design also allows us to isolate potential gains from neighborhood exporter presence that are partner-specific, from overall gains previously documented in the literature
    Keywords: exporter-importer match, trade networks, partner-specific spillovers
    JEL: F1 F14 L14 R12
    Date: 2015
  2. By: G. Hauton; J.-C. Héam
    Abstract: Financial institutions’ interconnectedness is a key component of systemic risk. However there is still no consensus on its measurement. Using a unique database of network of exposures of French financial institutions, we compare three strategies to measure interconnectedness: closeness of exposure distributions, identification of core-periphery structure and contagion models. Closeness of exposure distributions is adequate to identify outlier institutions. The "core-periphery" structure, usually applied to banking network, is still valid with insurance companies. However this structure is no longer adequate when exposures are normalized by equity, from a risk perspective. This result contrasts with previous analysis where size was not accounted for. Contagion-based stress-tests are the best suited to capture institutions’ systemic fragility, emphasizing their importance as a supervisory tool. Last, building on the assessment of these measurement strategies, we shed light on the pivotal role of financial conglomerates active in both the banking sector and the insurance sector.
    Keywords: Interconnectedness; Insurers; Conglomerate; Systemic Risk.
    JEL: G22 G28
    Date: 2014
  3. By: Tudor Niciporuc (Technical University of Cluj)
    Abstract: An inexperienced online marketer or a company which is new to social media marketing may just be very happy if their business page is getting many likes. This is one of the biggest mistakes that can be made when using Facebook. The world’s biggest social media platform provides countless tools for businesses to assess their perfomances; despite this, few marketers actually use them.The best way to be successful on Facebook is to focus on the engagement rate, which is calculated as the number users that have interacted with a post (whether they liked, shared, commented or clicked on the photo or link) divided by the total number of the page’s followers.Most people like a page because they saw their friends did so or because they were interested in a particular brand at a certain point in time. Consequently, even with an impressive number of likes, many business pages do not get much interaction with fans, thus their content mostly goes unnoticed. Meanwhile, when a high number of people are interacting with a brand, even if the number of followers is small, it means they are liking it, sharing its content and recommending the page to others. This means that the potential reach of that brand is much higher. So which social media platform provides the best engaged audience? Where can companies find the best quality-driven users? The purpose of this study is to answer answer these questions, by comparing the engagement rates on Facebook and Google Plus, using the social media pages of the petition platform. The study looks to analyze three major aspects. First of all, the post level engagement – how many likes, shares or comments a posts receives, on average. Secondly, the page level engagement, which asseses the number of people engaged as a share of the total number of followers. Third of all, we will have a look at the user’s behaviour once they have accessed the website, in terms of the average duration of a visit, pageviews per visit and bounce rate (the percentage of single-page visits). With the help of these indicators, we will essentially determine which social network generates more quality to the above mentioned website.
    Keywords: social media marketing, social networks, Facebook, Google Plus, engagement rate
    JEL: M31 M37
    Date: 2014–12
  4. By: Yong-gook Bae (Korea Institute of S&T Evaluation and Planning); Young-Hyun Jin (Korea Institute of S&T Evaluation and Planning)
    Abstract: The technological convergence, or the technological fusion, has become more important to create new technologies as well as new industries. As increasing of importance, we reviewed the IPC co-classification and citation information of the United States and Korean patents in 2009, 2010 and 2011. Network analysis methods and indexes including as a degree centrality and a betweenness centrality are used to analyze the characteristics of the technological convergence trends.Various networks were created based upon IPC co-classification and citation information in each country and year. In addition, IPC citation was utilized information between the patents which has different IPCs. Also, in the case of Korean patents, networks were created and analyzed to find the characteristics according to the types of institution such as university, public institution and business entity. Through the analysis, it was found that the trends and the uniqueness of the convergence researches. Those results shows the differences between two countries, the differences and changes between degree centrality and betweenness centrality, the differences between co-classification and citation. Also, it was found that the change according to each years from 2009 to 2011.
    Keywords: patent, convergence, technology, SNA
    JEL: D85 O32 O33
    Date: 2014–12
  5. By: Carlo Drago (Department of Economics (University of Verona)); Roberto Ricciuti (Department of Economics (University of Verona)); Paolo Santella (ESMA)
    Abstract: The purpose of this paper is to analyze the effects on the Italian directorship network of the corporate governance reform that was introduced in Italy in 2011 to prevent interlocking directorships in the financial sector. Interlocking directorships are important communication channels among companies and may have anticompetitive effect. We apply community detection techniques to the analysis of the networks in 2009 and 2012 to ascertain the effect of the reform. We find that, although the number of interlocking directorships decreases in 2012, the reduction takes place mainly at the periphery of the network whereas the network core is stable, allowing the most connected companies to keep their strategic position.
    Keywords: interlocking directorships, corporate governance, community detection, social networks
    JEL: C33 G34 G38 L14
    Date: 2015–03
  6. By: Hüser, Anne-Caroline
    Abstract: The banking system is highly interconnected and these connections can be conveniently represented as an interbank network. This survey presents a systematic overview of the recent advances in the theoretical literature on interbank networks. We assess our current understanding of the structure of interbank networks, of how network characteristics affect contagion in the banking system and of how banks form connections when faced with the possibility of contagion and systemic risk. In particular, we highlight how the theoretical literature on interbank networks offers a coherent way of studying interconnections, contagion processes and systemic risk, while emphasizing at the same time the challenges that must be addressed before general results on the link between the structure of the interbank network and financial stability can be established. The survey concludes with a discussion of the policy relevance of interbank network models with a special focus on macro-prudential policies and monetary policy.
    Keywords: interbank networks,systemic risk,contagion,banking,macro-prudential policy
    JEL: G21 E44 D85 G18 G01
    Date: 2015
  7. By: Carvalho, Vasco M; Voigtländer, Nico
    Abstract: The adoption and diffusion of inputs in the production network is at the heart of technological progress. What determines which inputs are initially considered and eventually adopted by innovators? We examine the evolution of input linkages from a network perspective, starting from a stylized model of network formation. Producers direct their search for new inputs along vertical linkages, screening the network neighborhood of existing suppliers to identify potentially useful inputs. A subset of these is then adopted, following a tradeoff between the benefits from input variety and the costs of customizing new inputs. Guided by this framework, we document a novel stylized fact at both the sector and the firm level: producers are more likely to adopt inputs that are already used – directly or indirectly – by their current suppliers. In particular, using disaggregated input-output data, we show that initial network proximity of a sector in 1967 significantly increases the likelihood of adoption throughout the subsequent four decades. A one-standard deviation decrease in network distance is associated with an increase in the adoption probability by one third to one half. Similarly, U.S. firms are significantly more likely to develop new input linkages among their suppliers’ network neighborhood. Our results imply that the existing production network plays a crucial role in the diffusion of inputs and the evolution of technology.
    Keywords: directed network search; dynamics of production networks; input adoption
    JEL: C67 D57 L23 O33
    Date: 2015–03
  8. By: Andreas Bjerre-Nielsen
    Abstract: We investigate formation of economic and social networks where agents may form or cut ties. The novelty is combining a setup where agents are heterogeneous in their talent for generating value in the links they form and value may also accrue from indirect ties. We provide sufficient conditions for assortative matching: agents of greater talent have partners of greater talent. A novel feature is that agents with higher talent are more central in networks. Another novel feature is degree assortativity: partnered agents have a similar number of partners. Two suboptimal network structures are noteworthy. One network displays excess assortativity as high and low talented types fail to connect, and thus inefficient due to payoff externalities despite otherwise obeying the conditions of Becker (1973). In another suboptimal network an agent of low talent becomes excessively central.
    Date: 2015–03
  9. By: Patacchini, Eleonora; Picard, Pierre M; Zenou, Yves
    Abstract: We develop a theoretical model where the existence and intensity of dyadic contacts depend on location. We show that agents tend to interact more with agents that are highly central in the network of social contacts and that are geographically closer. Using a unique geo-coded dataset of friendship networks in the United States, we find evidence consistent with this model. The main empirical challenge, which is the possible endogenous network formation, is tackled by employing a Bayesian methodology that allows to estimate simultaneously network formation and intensity of network contacts.
    Keywords: Bayesian estimation; endogenous network formation; geographical space; Social interactions; social space
    JEL: R1 R23 Z13
    Date: 2015–03
  10. By: Lorenzo Burlon (Bank of Italy)
    Abstract: We study how aggregate volatility is influenced by the propagation of idiosyncratic shocks across firms through the network of ownership relations. We use detailed data on cross-holdings as well as the relevant balance sheet information for almost the entire universe of Italian limited liability firms over the period 2005-2013. We first document that the ownership network matters for the correlation of firms' sales. Then, we construct a model where firms are linked through ownership relations and have limited access to credit markets. We characterize the aspects of the network structure that are important for the dynamics of the economy. A calibration to the key features of the Italian economy shows that the volatility implied by the model may account for a sizeable percentage of actual GDP fluctuations. Lastly, we conduct a counterfactual exercise to isolate the role played by the network structure itself in the propagation of idiosyncratic shocks at the aggregate level.
    Keywords: ownership networks, firms, financial frictions, business cycles
    JEL: E32 C68 D58
    Date: 2015–03

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