nep-net New Economics Papers
on Network Economics
Issue of 2015‒04‒19
ten papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Authority and Centrality: Power and Cooperation in Social Dilemma Networks By Ramalingam, Abhijit; Rojo Arjona, David; Schram, Arthur; Van Leeuwen, Boris
  2. Organisational Mechanisms for National Knowledge Network and Outcomes in the Institutes of Higher Education & Research: Moderating Role of Needs & Ecosystem By Singh, Manjari; Jain, Rekha
  3. Bank Networks: Contagion, Systemic Risk and Prudential Policy By Aldasoro, Iñaki; Delli Gatti, Domenico; Faia, Ester
  4. Network Form and Performance. The Case of Multi-Unit Franchising By Muriel Fadairo; Cintya Lanchimba; Josef Windsperger
  5. Systemic trade-risk of critical resources By Peter Klimek; Michael Obersteiner; Stefan Thurner
  6. Mapping and deterring violent extremist networks in North-West Africa By Olivier Walther; Christian Leuprecht
  7. Exploring multi-layer flow network of international trade based on flow distances By Bin Shen; Jiang Zhang; Qiuhua Zheng
  8. The geographical network of bank organizations: issues and evidence for Italy By Luca Papi; Emma Sarno; Alberto Zazzaro
  9. Production Networks, Geography and Firm Performance By Andrew B. Bernard; Andreas Moxnes; Yukiko U. Saito
  10. Income Distribution in Network Markets By Corrado Benassi; Marcella Scrimitore

  1. By: Ramalingam, Abhijit; Rojo Arjona, David; Schram, Arthur; Van Leeuwen, Boris
    Abstract: We investigate the effects of power on cooperation in repeated social dilemma settings. Groups of five players play either multi-player trust games or VCM-games on a fixed network. Power stems from having the authority to allocate funds raised through voluntary contributions by all members and/or from having a pivotal position in the network (centrality). We compare environments with and without ostracism by allowing players in some treatments to exclude others from further participation in the network. Our results show that power matters but that its effects hinge strongly on the type involved. Reminiscent of the literature on leadership, players with authority often act more cooperatively than those without such power. Nevertheless, when possible, they are quickly ostracized from the group. Thus, this kind of power is not tolerated by the powerless. In stark contrast, centrality leads to less cooperative behavior and this free riding is not punished; conditional on cooperativeness, players with power from centrality are less likely to be ostracized than those without. Hence, not only is this type of power tolerated, but so is the free riding it leads to.
    Keywords: power, cooperation, networks, public goods
    JEL: C91 D02 D03 H41
    Date: 2015–03
  2. By: Singh, Manjari; Jain, Rekha
    Abstract: We have looked at the relationship between organisational processes/ mechanisms for development, adoption and implementation of national knowledge network in the institutes of higher education and research and the organisational and individual level outcomes in those institutes. Our findings, based on regression analysis in a quantitative study covering 112 faculty members from user institutes show strong support for a positive relationship between organisational processes/ mechanisms and organisational level outcomes as well as between organisational processes/ mechanisms and individual level outcomes. We also found that need for high bandwidth and advanced computing resources and ecosystem or support for NKN in the user institutes positively strengthens the relationship between organisational processes/ mechanisms for NKN and individual level outcomes.
  3. By: Aldasoro, Iñaki; Delli Gatti, Domenico; Faia, Ester
    Abstract: We present a network model of the interbank market in which optimizing risk averse banks lend to each other and invest in non-liquid assets. Market clearing takes place through a tâtonnement process which yields the equilibrium price, while traded quantities are determined by means of a matching algorithm. Contagion occurs through liquidity hoarding, interbank interlinkages and fire sale externalities. The resulting network configuration exhibits a core-periphery structure, dis-assortative behavior and low density. Within this framework we analyze the effects of prudential policies on the stability/efficiency trade-off. Liquidity requirements unequivocally decrease systemic risk but at the cost of lower efficiency (measured by aggregate investment in non-liquid assets); equity requirements tend to reduce risk (hence increasestability) without reducing significantly overall investment.
    Keywords: banking networks; contagion; fire sales; prudential regulation; systemic risk
    JEL: C63 D85 G21 G28 L14
    Date: 2015–04
  4. By: Muriel Fadairo (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France, Université Jean Monnet, Saint-Etienne, F-42000, France); Cintya Lanchimba (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France, Université Jean Monnet, Saint-Etienne, F-42000, France; National Polytechnic School of Quito, Ecuador); Josef Windsperger (University of Vienna, Austria, Faculty of Business, Economics and Statistics, Oskar-Morgenstern-Platz 1, 1090 Vienna)
    Abstract: Multi-unit franchising (MUF) is a governance form inside franchising networks where the franchisor transfers to the franchisees the right to own and operate more than one outlet. While previous empirical literature has revealed various advantages of MUF as compared to single-unit franchising (SUF), we study the impact of this governance form on the network performance, taking into account different contexts. Our results from propensity score matching show that MUF leads to higher performance. However, non-parametric estimations highlight thresholds suggesting that a mix of SUF and MUF is a more efficient governance form than a pure MUF network.
    Keywords: Network governance, franchising, propensity score matching, nonparametric regressions
    JEL: M21 L14 C14
    Date: 2015
  5. By: Peter Klimek; Michael Obersteiner; Stefan Thurner
    Abstract: In the wake of the 2008 financial crisis the role of strongly interconnected markets in fostering systemic instability has been increasingly acknowledged. Trade networks of commodities are susceptible to deleterious cascades of supply shocks that increase systemic trade-risks and pose a threat to geopolitical stability. On a global and a regional level we show that supply risk, scarcity, and price volatility of non-fuel mineral resources are intricately connected with the structure of the world-trade network of or spanned by these resources. On the global level we demonstrate that the scarcity of a resource, as measured by its trade volume compared to extractable reserves, is closely related to the susceptibility of the trade network with respect to cascading shocks. On the regional level we find that to some extent the region-specific price volatility and supply risk can be understood by centrality measures that capture systemic trade-risk. The resources associated with the highest systemic trade-risk indicators are often those that are produced as byproducts of major metals. We identify significant shortcomings in the management of systemic trade-risk, in particular in the EU.
    Date: 2015–04
  6. By: Olivier Walther (Department of Border Region Studies, University of Southern Denmark); Christian Leuprecht (Queen's University)
    Abstract: This article examines the structural and spatial organization of violent extremist organizations (VEOs) across the Sahara. Building on the Armed Conflict Location and Event Dataset (ACLED), a public collection of political violence data for developing states, the article investigates structural connections of VEOs and the effect of borders on the spatial patterns of armed groups. Social network analysis reveals that the network involving VEOs had a low density, a low level of transitivity, and contained few central actors, three typical characteristics of negative-tie networks. Al Qaeda in the Islamic Maghreb (AQIM) is unquestionably the most connected VEO, which in purely network terms can be seen as a liability. Spatial analysis shows that, while violence was almost exclusively concentrated within Algeria between 1997 and 2004, cross-border movements intensified in the mid-2000s following the establishment of military bases by AQIM in Mali. As of late, VEOs have primarily concentrated their operations in Northern Mali as well as Southern Algeria, whereas Mauritania, Niger and Chad have been relatively unaffected. It follows that deterrence and containment strategies should be devised for regions rather than states. The findings have significant implications for multinational security and stability operations and the need to coordinate transnationally.
    Keywords: violent extremist organizations, social networks, terrorism, borders, Sahel, Sahara, Africa
    JEL: N40 N47 D74
    Date: 2015–04
  7. By: Bin Shen; Jiang Zhang; Qiuhua Zheng
    Abstract: Based on the approach of flow distances, the international trade flow system is studied from the perspective of multi-layer flow network. A model of multi-layer flow network is proposed for modelling and analyzing multiple types of flows in flow systems. Then, flow distances are introduced, and symmetric minimum flow distance is presented. Subsequently, we discuss the establishment of the multi-layer flow networks of international trade from two coupled viewpoints, i.e., the viewpoint of commodity flow and that of money flow. Thus, the multi-layer flow networks of international trade is explored. First, trading "trophic levels" are adopted to depict positions that economies occupied in the flow network. We find that the distributions of trading "trophic levels" have the similar clustering pattern for different types of commodity, and there are some regularities between money flow network and commodity flow network. Second, we find that active and competitive countries trade a wide spectrum of products, while inactive and underdeveloped countries trade a limited variety of products. Besides, some abnormal countries import many types of goods, which the vast majority of countries do not need to import. It may indicate an abnormal economic status. Third, harmonic node centrality is proposed and we find the phenomenon of centrality stratification. It means that competitive countries tend to occupy the central positions in the trading of a large variety of commodities, while underdeveloped countries likely in the peripheral positions in the trading of their limited varieties of products. Fourth, we find that manufactured products have significant larger mean first-passage flow distances from the source to the sink than that of primary products.
    Date: 2015–04
  8. By: Luca Papi (Universit… Politecnica delle Marche, Dipartimento di Scienze economcihe e Sociali, MoFiR); Emma Sarno (Universit… di Napoli "L'Orientale"); Alberto Zazzaro (Universit… Politecnica delle Marche, MoFiR)
    Abstract: The evolution of the banking industry has always been affected by recurrent waves of technological, regulatory and organizational changes. All such changes have significant effects on the spatial organization of banks, the interconnectedness of geographical credit markets and the core-periphery structure of banking industry. In this chapter, we review the literature on the effects of geographical distances between the key actors of the credit market (the borrowing firm, the lending branch, the lending bank, and rival banks) on lending relationships and interbank competition. Using the metrics and graph techniques for network analysis we then provide evidence concerning the evolving geographical network of bank organizations in Italy.
    Keywords: Distances in credit markets, network analysis, spatial organization of banks
    JEL: G2
    Date: 2015–04
  9. By: Andrew B. Bernard; Andreas Moxnes; Yukiko U. Saito
    Abstract: This paper examines the importance of buyer-supplier relationships, geography and the structure of the production network in firm performance. We develop a simple model where firms can outsource tasks and search for suppliers in different locations. Low search and outsourcing costs lead firms to search more and find better suppliers. This in turn drives down the firm's marginal production costs. We test the theory by exploiting the opening of a high-speed (Shinkansen) train line in Japan which lowered the cost of passenger travel but left shipping costs unchanged. Using an exhaustive dataset on firms' buyer-seller linkages, we find significant improvements in firm performance as well as creation of new buyer-seller links, consistent with the model.
    JEL: D22 D85 F14 L10 L14 R12
    Date: 2015–04
  10. By: Corrado Benassi; Marcella Scrimitore
    Abstract: We enquiry about the effects of first and second order stochastic dominance shifts of the distribution of the consumers’ willingness to pay, within the standard model of a market with network externalities and hump-shaped demand curve. This issue is analyzed in the polar cases of perfect competition and monopoly. We find that, while under perfect competition both types of distributional changes result in higher output, provided marginal costs are low enough, in the monopoly case the final outcome depends on the way income distribution and the network externality interact in determining market demand elasticity.
    Keywords: Network externalities, income distribution, stochastic dominance.
    JEL: D31 D40 L1
    Date: 2015–04–15

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