nep-net New Economics Papers
on Network Economics
Issue of 2015‒05‒09
seven papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Networks and Manufacturing Firms in Africa: Results from a Randomized Field Experiment By Marcel Fafchamps; Simon R. Quinn
  2. Bargaining agenda in a unionised monopoly with network effects By Fanti, Luciano; Buccella, Domenico
  3. Manager-union bargaining agenda under monopoly and with network effects By Fanti, Luciano; Buccella, Domenico
  4. The Microeconomics of Television Markets By Hurren, Konrad
  5. Boundedly Rational Opinion Dynamics in Social Networks: Does Indegree Matter? By Pietro Battiston; Luca Stanca
  6. ICT Standardization and use of ICT standards: a firm level analysis By Riillo, Cesare Fabio Antonio
  7. Efficient Network Structures with Separable Heterogeneous Connection Costs By Heydari, Babak; Mosleh, Mohsen; Dalili, Kia

  1. By: Marcel Fafchamps; Simon R. Quinn
    Abstract: We run a novel field experiment to link managers of African manufacturing firms. The experiment features exogenous link formation, exogenous seeding of information, and exogenous assignment to treatment and placebo. We study the impact of the experiment on firm business practices outside of the lab. We find that the experiment successfully created new variation in social networks. We find significant diffusion of business practices only in terms of VAT registration and having a bank current account. This diffusion is a combination of diffusion of innovation and simple imitation. At the time of our experiment, all three studied countries were undergoing large changes in their VAT legislation.
    JEL: D22 L26 O33
    Date: 2015–04
  2. By: Fanti, Luciano; Buccella, Domenico
    Abstract: This paper investigates the bargaining agenda selection in a unionised monopoly with network effects. In contrast with the established result that monopolist always prefers Right-To-Manage (RTM), it is shown that monopolist prefers Sequential Efficient Bargaining (SEB), provided that the network effect is sufficiently intense and union’s power not too high. Since the union always prefers SEB, the presence of network effects may solve the traditional conflict of interests between parties and allow the achievement of the highest social welfare. Moreover, if the monopolist can choose the agenda, it may strategically commit either to RTM or SEB or EB to deter market entry, depending on the network intensity and thus all agendas are an effective device as a barrier to entry. Furthermore, with endogenous agenda’s selection, the parties may agree on SEB, provided that the network effects are intense and the union’s power not excessively low. The social welfare under duopoly with SEB is the Pareto-superior outcome. However, the SEB institution may deter entry in specific cases. Thus, the SEB institution itself may prevent the most desirable welfare outcome but in any case it remains socially preferred to RTM and EB.
    Keywords: Efficient bargaining; Right-to-manage; Firm-union bargaining agenda; Network effects
    JEL: J51 L13 L21
    Date: 2015
  3. By: Fanti, Luciano; Buccella, Domenico
    Abstract: The present paper investigates the determination of the bargaining agenda in a unionised monopoly with managerial delegation, without and with network effects in consumption. First, we show that, in contrast with the received literature, monopolist hires a manager even in the absence of risk-sharing and asymmetric information considerations. Without network effects, in contrast to standard oligopoly results, managerial delegation benefits the monopolist, while harms consumers, workers and society. Moreover, in contrast to the conventional wisdom, monopoly profits with managerial delegation are higher with sequential Efficient Bargaining (EB) than Right-to-Manage (RTM), while union’s welfare can be higher with RTM than EB: then a conflict of interests between the parties may exist but, paradoxically, for reverted choices of the bargaining agenda. Consumption externalities change the picture: managerial delegation benefits consumers, workers and society, provided that the network effect is sufficiently strong and union’s power relatively low. The monopolist still prefers sequential EB; however, the union’s welfare becomes larger under EB even for relatively low value of their power, provided that the network effect is sufficiently strong. Thus, the monopolist and the union endogenously choose the EB agenda which is also Pareto-superior.
    Keywords: Efficient Bargaining; Right-to-manage; Firm-union bargaining agenda; Managerial Delegation; Network effects
    JEL: J51 L13 L21
    Date: 2015–05–04
  4. By: Hurren, Konrad
    Abstract: I consider the literature surrounding the television market. Two important issues in the literature are: the market's two-sided nature, and bundling of channels. I discuss how an asymmetric pricing structure arises in television markets. The literature on bundling in the television market is reviewed, with some authors finding that bundling is a first best solution. Other authors show that a la carte pricing is socially optimal. Interestingly, there is consensus that mixed bundling is unambiguously worse than pure bundling and a la carte. Public service broadcasting is described in four English speaking countries to provide context. Failures in the television market are identified and some policy responses are discussed. I include literature analysing a price cap on basic cable packages and a domestic content requirement.
    Keywords: Bundling, Television, Two-Sided Markets,
    Date: 2014
  5. By: Pietro Battiston; Luca Stanca
    Abstract: This paper investigates opinion dynamics and social in uence in directed communication networks. We study the theoretical properties of a boundedly rational model of opinion formation in which individuals aggregate the information they receive from their neighbors by using weights that are a function of neighbors' indegree. We then present the results of a laboratory experiment explicitly designed to test the causal effect of indegree on social in uence. We find that the social influence of an agent is positively affected by the number of individuals she listens to. When forming their opinions, agents take into account the structure of their communication network, although only to a limited extent.
    Keywords: Social Networks, Learning, Social Influence, Bounded Rationality
    Date: 2015–04–24
  6. By: Riillo, Cesare Fabio Antonio
    Abstract: Standards perform some fundamental economic functions and their relevance for ICT is acknowledged by firms, researchers and policy-makers. This paper investigates the driving forces of formal ICT standards setting (i.e. standardization). Previous quantitative studies have neglected that ICT standards use and engagement in ICT standardization are related activities. Leveraging upon a unique module of the ICT usage survey 2013 for Luxembourg, the analysis explicitly takes into account the use of formal ICT standards on a large representative sample of firm. While previous analyses find that larger firms are more likely to participate in standardization, the results of the analysis suggest that size has a complex pattern. Small firms for whom ICT standards are particularly relevant could overcome the barriers that prevent other firms to benefit from standardization. Additionally, the paper investigates the relationship between the professional use of social network and ICT standards and standardization. The use of social networks is positively correlated with the adoption of ICT standards but not with the participation.
    Keywords: ICT Standardization, ICT standards, social networks, size, recursive bivariate probit
    JEL: L80 L86 O39
    Date: 2014–09–08
  7. By: Heydari, Babak; Mosleh, Mohsen; Dalili, Kia
    Abstract: We introduce a heterogeneous connection model for network formation to capture the effect of cost heterogeneity on the structure of efficient networks. In the proposed model, connection costs are assumed to be separable, which means the total connection cost for each agent is uniquely proportional to its degree. For these sets of networks, we provide the analytical solution for the efficient network and discuss stability implications. We show that the efficient network exhibits a core-periphery structure, and for a given density, we find a lower bound for clustering coefficient of the efficient network.
    Keywords: Complex Networks, Connection Model, Efficient networks, Distance-based utility, Core-periphery, Pairwise Stability
    JEL: D85
    Date: 2015–05–27

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