nep-net New Economics Papers
on Network Economics
Issue of 2015‒05‒22
fourteen papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Clean Money in a Dirty System: Relationship Networks and Land Rezoning in Queensland By Murray, Cameron K.; Frijters, Paul
  2. Network-motivated Lending Decisions By OGURA Yoshiaki; OKUI Ryo; SAITO Yukiko
  3. Competition for advertisers and for viewers in media markets By Anderson, Simon P; Foros, Øystein; Kind, Hans Jarle
  4. Internet peer production and unauthorized copying of intellectual property via BitTorrent network By Slawomir Czetwertynski
  5. Networking, context and firm-level innovation: Cooperation through the regional filter in Norway By Rune Dahl Fitjar; Andrés Rodríguez-Pose
  6. Another cluster premium: Innovation subsidies and R&D collaboration networks By Tom Broekel; Dirk Fornahl; Andrea Morrison
  7. International production networks in ASEAN economies By Taguchi, Hiroyuki; Murofushi, Harutaka
  8. Technology Transfer in ASEAN Countries: Some Evidence from Buyer-Provided Training Network Data By Dionisius A. NARJOKO
  9. Network (Mis)Alignment, Technology Policy and Innovation: The Tale of Two Brazilian Cities By Janaina Pamplona da Costa
  10. Identifying Geographic Clusters: A Network Analytic Approach By Catini, Roberto; Karamshuk, Dmytro; Penner, Orion; Riccaboni, Massimo
  11. Network Structure, Capacity Growth and Route Hierarchies: The case of China’s Air Traffic System (ATS) revisited By Huber, Hans
  12. Buyer-Supplier Networks and Aggregate Volatility By MIZUNO Takayuki; SOUMA Wataru; WATANABE Tsutomu
  13. Co-worker networks and productivity growth in regions By Balázs Lengyel; Rikard H. Eriksson
  14. Social Networks, Reputation and Commitment: Evidence from a Savings Monitors Experiment By Emily Breza; Arun G. Chandrasekhar

  1. By: Murray, Cameron K. (University of Queensland); Frijters, Paul (University of Queensland)
    Abstract: We use a unique regulatory event that occurred in Queensland, Australia, from 2007- 2012, to examine the predictive power of landowner relationship networks and lobbying behaviour on successfully gaining value-enhancing rezoning. A State authority, the Urban Land Development Authority (ULDA), took planning control away from local councils in selected areas in order to increase the speed and scale of development in those areas, in the process increasing land values. Using micro-level relationship data from multiple sources, we compare the relationship-network characteristics of landowners of comparable sites inside and outside the ULDA areas, finding that 'connected' landowners owned 75% of land inside the rezoned areas, and only 12% outside, capturing $410 million in land value gains out of the total $710 million from rezoning. The marginal gains to all landowners of becoming connected in our sample were $190 million. We also find that engaging a professional lobbyist is a substitute for having one's own connections. Scaling up from our sample of six rezoned areas to the hundreds of rezoning decisions across Queensland and Australia in the last few decades, suggests that many billions of dollars of economic rent are being regularly transferred from the general population to connected land owners through political rezoning decisions.
    Keywords: networks, social capital, rezoning, corruption, lobbying
    JEL: D72 D73 R52 R58
    Date: 2015–04
  2. By: OGURA Yoshiaki; OKUI Ryo; SAITO Yukiko
    Abstract: We demonstrate theoretically and empirically that monopolistic or collusive banks will keep lending to a loss-making firm at an interest rate lower than the prime rate if the firm is located in an influential position in an inter-firm supply network. An influential firm generates a positive externality, and its exit damages sales in the supply network. To internalize this externality, the banks may forbear on debt collection and/or bail out such influential firms when the cost to support the loss-making influential company can be recouped by imposing high interest rates on less influential companies. The analytical model shows that such forbearance can improve welfare. Our empirical study, performed using a unique dataset containing information about inter-firm transactions, provides evidence for such network-motivated lending decisions. In particular, this effect is observed more clearly at less credit-worthy firms whose main bank is a regional bank. Notably, we observe that such banks are often dominant lenders in the local loan market, and most of their clientele do not have direct access to the stock and bond markets.
    Date: 2015–05
  3. By: Anderson, Simon P; Foros, Øystein; Kind, Hans Jarle
    Abstract: Standard models of advertising-financed media assume consumers patronize a single media platform, precluding effective competition for advertisers. Such competition ensues if consumers multi-home. The principle of incremental pricing implies that multi-homing consumers are less valuable to platforms. Then entry of new platforms decreases ad prices, while a merger increases them, and ad-financed platforms may suffer if a public broadcaster carries ads. Platforms may bias content against multi-homing consumers, especially if consumers highly value overlapping content and/or second impressions have low value.
    Keywords: genre choice; incremental ad pricing; media bias; media economics; multi-homing; overlap
    JEL: D11 D60 L13
    Date: 2015–05
  4. By: Slawomir Czetwertynski (Wroclaw University of Economics)
    Abstract: This article refers to the phenomenon of peer production in the context of unauthorized copying of information goods. Peer production as says Yochai Benkler is production based on activity of community. It is widely used on the Internet and in its effect there have been created and developed such information goods as GNU Linux and Wikipedia. Although peer production contributes to the growing importance of free software or open source initiative, it is also strongly associated with the spread of unauthorized copying of intellectual property commonly know as Internet piracy. The mass character of this phenomenon - nearly 24% of Internet traffic is unauthorized - can not be underestimated. The hypothesis stands in the article is that a low level of protection against the production of unauthorized copies of intellectual property stems from the fact that they are formed largely in the process of peer production. The objective of the study is to verify this hypothesis in the context of the nature of peer production and unauthorized copying. The research area is limited to file-sharing networks P2P protocol based on BitTorret.
    Keywords: peer production, unauthorized copying, intelecttual property, BitTorrent
    JEL: D01 D24 O34
    Date: 2015–05
  5. By: Rune Dahl Fitjar; Andrés Rodríguez-Pose
    Abstract: The paper assesses the role for innovation of one aspect which has been generally overlooked by evolutionary economic geography: context. It analyses how context shapes the impact of collaboration on firm-level innovation for 1604 firms located in the five largest city regions of Norway. Specifically, the analysis shows how the benefits to firms of collaborating within regional, national, and international innovation networks are affected by the knowledge endowments of the region within which the firm is located. Using a logit regression analysis, we find, first, that only national and international networking have a significant positive impact on the likelihood of innovation (the former only for process innovation), whereas the regional knowledge endowments have no direct effect. Second, regional cooperation is particularly effective in regions with high investments in R&D, whereas international cooperation is important in regions with an educated workforce – and regional and national collaboration may be ineffective in such cases. We conclude that, in the case of Norway, context is essential in determining the capacity of firms to set up networks and innovate. Regions with an educated workforce can use the resulting absorptive capacity to successfully assimilate knowledge being diffused through global pipelines from faraway places. However, this absorptive capacity is likely to be heavily filtered if regional firms mainly rely on internal connections within Norway.
    Keywords: Innovation; interaction; networking; context; human capital; R&D; firms; Norway
    Date: 2015–05
  6. By: Tom Broekel; Dirk Fornahl; Andrea Morrison
    Abstract: This paper investigates the allocation of R&D subsidies with a focus on the granting success of firms located in clusters. On this basis it is evaluated whether firms in these clusters are differently embedded into networks of subsidized R&D collaboration than firms located elsewhere. The theoretical arguments are empirically tested using the example of the German biotechnology firms’ participation in the 6th EU-Framework Programmes and national R&D subsidization schemes in the early 2000s. We show that clusters grant firms another premium to their location, as they are more likely to receive funds from the EU-Framework Programmes and hold more favourable positions in national knowledge networks based on subsidies for joint R&D.
    Keywords: Innovation policy, R&D subsidy, collaboration networks, embeddedness, technology cluster
    JEL: R11 O33 R58 D85
    Date: 2015–05
  7. By: Taguchi, Hiroyuki; Murofushi, Harutaka
    Abstract: This chapter examines the international production network (IPN) development mainly by focusing on ASEAN economies. The emphases through the findings and observations can be highlighted as follows: the IPNs have actually been developed since 1990s in ASEAN, especially in Mekong region with rapid way; the IPN development has been accompanied with win-win relationships of industrial activities among ASEAN economies; and an economy’s IPN participation has contributed to its GDP growth with dynamic “smile curve” development path with upgrading industrial capacities. For further penetration of IPNs at the edge of ASEAN, there should be several issues to be cleared such as enhancing regional connectivity.
    Keywords: International production networks, ASEAN, Mekong region
    JEL: F23 O53
    Date: 2014–03
  8. By: Dionisius A. NARJOKO (Economic Research Institute for ASEAN and East Asia, Indonesia)
    Abstract: Technology transfers are important channels for firms in developing countries to get access to new technology and initiate innovation. This paper examines the geographical pattern of technology transfers in the form of buyer-provided training in domestic and international production networks. Our unique buyer-supplier network data in four countries in Southeast Asia allow us to directly observe the buyer-supplier relationship as well as the existence of inter-firm provision of training for product/process innovation in order to investigate the geographical structure of knowledge acquisition, dissemination, and aggregation among local and non-local firms. The empirical analysis finds the following: (i) the probability of having training provided by the main buyer presents a U-shaped quadratic pattern with respect to the geographical distance between the respondent firms and the main buyers. The geographical proximity to the main buyer seems to be particularly important for local firms. (ii) The training provision is likely for both local and non-local firms when the main buyer is a multinational located in the same country. (iii) The probability of having training from the main buyer is high when the main buyer conducts R&D. (iv) Both local and non-local firms that have training provided by their main buyers are likely to provide training to their main suppliers. (v) In the case of non-local firms, product innovation with production partners is more likely when they have upstream/downstream training. However, such links seem to be weaker in the case of local firms
    Keywords: buyer-provided training; FDI spillovers; backward linkages; Southeast Asia
    JEL: M5 O31 O32 R12
    Date: 2015–05
  9. By: Janaina Pamplona da Costa (State University of Campinas, Department of Science and Technology Policy)
    Abstract: This article addresses network alignment through an investigation of network governance (coordination) and structure, and examines how regional level network governance and structure influence the effectiveness of technology policy to improve local firms’ innovativeness in a developing country context. It examines whether network governance and structure have a consistent influence on firms’ innovative performance in developing country regions with different levels of socio-economic development. The empirical evidence is based on case studies of the Campinas and Recife regional software networks in Brazil and the innovative performance of the participating local firms. We find that adoption of a general technology policy prescription and formation of networks to improve firm-level innovation and regional catch-up should involve careful consideration of the intended effects: membership of a network may not be a necessary condition for improved innovation at firm level.
    Keywords: network alignment; network governance; Brazilian software industry; innovation networks; technology policy effectiveness; regional development
    Date: 2015–05
  10. By: Catini, Roberto; Karamshuk, Dmytro; Penner, Orion; Riccaboni, Massimo
    Abstract: In recent years there has been a growing interest in the role of networks and clusters in the global economy. Despite being a popular research topic in economics, sociology and urban studies, geographical clustering of human activity has often studied been by means of predetermined geographical units such as administrative divisions and metropolitan areas. This approach is intrinsically time invariant and it does not allow one to differentiate between different activities. Our goal in this paper is to present a new methodology for identifying clusters, that can be applied to different empirical settings. We use a graph approach based on k-shell decomposition to analyze world biomedical research clusters based on PubMed scientific publications. We identify research institutions and locate their activities in geographical clusters. Leading areas of scientific production and their top performing research institutions are consistently identified at different geographic scales.
    Keywords: innovation clusters; network analysis; bio-pharmaceutical industry
    JEL: C6 O31 R12
    Date: 2015–05–14
  11. By: Huber, Hans
    Abstract: This paper examines air traffic patterns among China’s scheduled airlines in January 2006 and January 2011, using Official Airline Guide data on carrier schedules. The author classifies Chinese carriers into one of 4 classes. Airports are also organized into a classification scheme based on several criteria related to the total volume of traffic, the carriers serving the airports and the nature of the airports to which they are connected. Counts, sums, percentage shares and changes in these calculations between 2006 and 2011 are presented in a small number of tables. Inferences about the fundamental structure and future patterns of capacity growth for the yet not fully emerged Chinese ATS can be drawn.
  12. By: MIZUNO Takayuki; SOUMA Wataru; WATANABE Tsutomu
    Abstract: This paper investigates the structure and evolution of customer-supplier networks in Japan using a unique dataset that contains information on customer and supplier linkages for over 500,000 incorporated non-financial firms for the five years from 2008 to 2012. We find, first, that the number of customer links is unequal across firms: the customer link distribution has a power-law tail with an exponent of unity (i.e., it follows Zipf's law). We interpret this as implying that competition among firms to acquire new customers yields winners that attract a large number of customers, as well as losers that end up with fewer customers. We also show that the shortest path length for any pair of firms is, on average, 4.3 links. Second, we find that link switching is relatively rare. Our estimates indicate that 92% of customer links and 93% of supplier links survive each year. Third and finally, we find that firm growth rates tend to be more highly correlated as the closer two firms are to each other in a customer-supplier network (i.e., the smaller is the shortest path length for the two firms). This suggests that a non-negligible portion of firm growth fluctuations stem from the propagation of microeconomic shocks—shocks that affect a specific firm—through the customer-supplier chains.
    Date: 2015–05
  13. By: Balázs Lengyel; Rikard H. Eriksson
    Abstract: This paper provides a new empirical perspective for analysing the role of social networks for regional economic growth by constructing large-scale networks from employee-employee co-occurrences in plants in the entire Swedish economy 1990-2008. We calculate the probability of employee-employee ties at plant level based on homophily-biased random network assumptions and trace the most probable relations of every employee over the full period. We argue that these personal acquaintances are important for local learning opportunities and consequently for regional growth. Indeed, the paper provides the first systematic evidence for a central claim in economic geography: social network density has positive effect on regional growth defined as productivity growth. Interestingly, the most robust effect of density on growth was found in a segment of the co-worker network in which plants have never been linked by labour mobility previously.
    Keywords: social network, random network with homophily bias, probability of tie, labour mobility, regional productivity growth, panel regression
    JEL: D85 J24 J61 R11 R23
    Date: 2015–05
  14. By: Emily Breza; Arun G. Chandrasekhar
    Abstract: We conduct a field experiment with 1,300 participants in India to measure whether individuals save more when information about their savings is regularly shared with another member of their village (a “monitor”). We focus on whether the monitor's effectiveness depends on her social network position, as central monitors may be better able to disseminate information, and more proximate monitors may be more likely to pass information to individuals who interact with the saver most frequently. In 30 villages, we randomly assign monitors to a subset of savers. An average monitor increases total savings by 35%. Increasing the monitor’s network centrality by one standard deviation increases savings by 14%, and increasing proximity from social distance three to two increases savings by 16%. Supporting the information-based mechanism, 63% of monitors report telling others about the saver’s progress. Further, over a year later, villagers are more likely to know if the saver exceeded her goal and to think that the saver is responsible if the saver was randomly assigned to a more central monitor. We also provide evidence that the increase in savings persists over a year after the intervention’s end, and that monitored savers can better respond to shocks. In the remaining 30 villages, savers choose their own monitors. We find that savers choose monitors who are both proximate and central in the network. Finally, we find evidence of spillovers from monitored savers onto their non-monitored friends, suggesting another channel through which social networks influence savings decisions.
    JEL: D14 D83 L14 O16 Z13
    Date: 2015–05

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