nep-net New Economics Papers
on Network Economics
Issue of 2015‒06‒27
seven papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. The role of network effects and consumer heterogeneity in adoption of mobile phones: evidence from South Africa By Lukasz Grzybowski
  2. On the efficiency of Bertrand and Cournot equilibrium in the presence of asymmetric network compatibility effects By Tsuyoshi Toshimitsu
  3. Effects of social network structure on the diffusion and adoption of agricultural technology: Evidence from rural Ethiopia By Yasuyuki Todo; Petr Matous; Dagne Mojo
  4. Price and quantity competition in a differentiated duopoly with network compatibility effects By Tsuyoshi Toshimitsu
  5. The education networks of Latin America. Effects on trade during and after the cold war By Marina Murat; María Luisa Recalde; Pedro Gabriel Degiovanni
  6. The design of road and air networks for express service providers By Meuffels, W.J.M.
  7. Antitrust, Regulation and the Neutrality Trap By Renda, Andrea

  1. By: Lukasz Grzybowski
    Abstract: In this paper we analyze the role of network effects and consumer heterogeneity in the adoption of mobile phones. We estimate the decision to adopt a mobile phone using panel survey data of South African households between the years 2008 and 2012, which includes interviews with all adult household members. We construct variables which approximate network effects on the household level and find that the greater the number of mobile phones in the household, the greater the likelihood that the other household members will also adopt a mobile phone. Moreover, network effects depend on who in the household adopts a mobile phone. Without within-household network effects the penetration of mobile phones of 76.4% in 2012 would be lower by about 9.9 percentage points. The decision to adopt a mobile phone is also explained by observed and unobserved consumer heterogeneity.
    Keywords: Mobile phones, Network effects, Consumer heterogeneity
    JEL: L13 L96
    Date: 2015
  2. By: Tsuyoshi Toshimitsu (School of Economics, Kwansei Gakuin University)
    Abstract: Based on a differentiated duopoly model, we consider the efficiency of Bertrand and Cournot equilibrium in the presence of network effects and product compatibility. In particular, we demonstrate that if an asymmetric product compatibility with a strong network effect between the firms arises, give certain conditions, Cournot equilibrium is more efficient than Bertrand equilibrium in terms of greater consumer, producer, and social surplus.
    Keywords: Bertrand equilibrium; Cournot equilibrium; product compatibility; network effect; fulfilled expectation; horizontally differentiated duopoly
    JEL: L13 L32 L33
    Date: 2015–06
  3. By: Yasuyuki Todo (Faculty of Political Science and Economics, Waseda University); Petr Matous (Complex Systems Research Group, School of Engineering, University of Sydney); Dagne Mojo (Holetta Agricultural Research Center, Ethiopian Institute of Agricultural Research, Holetta, Ethiopia)
    Abstract: This paper investigates the effects of social network structure on the diffusion of agricultural technologies using household-level panel data from Ethiopia. We correct for possible biases due to the endogeneity of social networks using a social experiment in which we provide mobile phones to randomly selected households. We find that the effect of social networks varies depending on the network structure and characteristics of the technologies considered. The diffusion of information on a simple technology is determined by whether farmers know an agricultural extension agent. However, the diffusion of information on a more complex technology is not promoted by simply knowing an extension agent but by knowing an agent that a particular household can rely on and by clustered networks in which most friends of the household are friends of each other. This finding suggests that knowing and understanding more complex technologies require strong external ties and flows of the same information from multiple sources.
    Keywords: knowledge diffusion, technology adoption, agriculture, social network, Ethiopia
    JEL: O13 O33 Q16
    Date: 2015–06
  4. By: Tsuyoshi Toshimitsu (School of Economics, Kwansei Gakuin University)
    Abstract: We consider endogenous choice of the strategic variables, price and quantity, in a horizontally differentiated duopoly market, assuming network effects and product compatibility (hereafter, network compatibility effects). We demonstrate the following. If the degree of network compatibility effects of the other rival firm is smaller (larger) than the degree of product substitutability, then choosing quantity (price) is a dominant strategy for the firm. In this case, the Cournot (Bertrand) equilibrium arises. If there are asymmetric network compatibility effects between the firms, the firm with larger (smaller) network compatibility effects than the degree of product substitutability chooses quantity (price). In this case, the Cournot−Bertrand equilibrium arises.
    Keywords: Bertrand equilibrium; Cournot equilibrium; Cournot−Bertrand equilibrium; product compatibility; network effect; fulfilled expectation; horizontally differentiated duopoly
    JEL: C72 D01 D43 L13
    Date: 2015–06
  5. By: Marina Murat; María Luisa Recalde; Pedro Gabriel Degiovanni
    Abstract: The friendship and social networks international students tend to build during their university studies can boost trade between the home country and that of the alma mater. This paper tests the effects of Latin American students on bilateral trade between eleven home economies and nine OECD countries during 1971-2012. We find education networks to positively and significantly affect both exports and imports. Also, the democratization and liberalization of Latin American political regimes following the end of the cold war slightly weaken the influence of networks, but directly and positively affect trade. Results are robust to different specifications and regressors.
    Keywords: bilateral trade, education networks, international students, Latin America.
    JEL: F14 F29 F59 I20
    Date: 2015–06
  6. By: Meuffels, W.J.M. (Tilburg University, School of Economics and Management)
    Abstract: Express service providers move packages (i.e. parcels, documents, or pieces of freight) from senders to receivers under various but guaranteed service level agreements. These service level agreements specify date and time of collection at the sender, and receiving at the customer. Research in this dissertation is dedicated to the design of so-called express line-haul transports from the first consolidation point, the origin depot, to the last consolidation point, the destination depot. The line-haul transport is commonly organized either via road or via air. Hub locations are used to sort packages of incoming line-hauls, and to consolidate and load these packages on the outgoing line-hauls. The strategic network design problem is concerned with decisions on these hub locations in the network: how many hubs are needed and where should these be located, and which line-hauls are unloaded and loaded at each hub location? The tactical planning level at express service providers contains decisions on package routings from origin to destination and asset usages. This dissertation focusses on the design of the strategic and tactical line-haul network for road transport in Part I of this dissertation and deals with similar topics for air transport in Part II of this dissertation. In the concluding chapters we present a general review of strategic and tactical network design for express service providers and point to directions for future research. <br/>
    Date: 2015
  7. By: Renda, Andrea
    Abstract: EU Internet policy seems bewitched by the term ‘neutrality’, applied to networks and now search engines and other online platforms. Andrea Renda questions in this latest Special Report whether this is this a good way to protect end users. Originally confined to the infrastructure layer, today the neutrality rhetoric is being expanded to multi-sided platforms such as search engines and more generally online intermediaries. Policies for search neutrality and platform neutrality are invoked to pursue a variety of policy objectives, encompassing competition, consumer protection, privacy and media pluralism. This paper analyses this emerging debate and comes to a number of conclusions. First, mandating net neutrality at the infrastructure layer might have some merit, but it certainly would not make the Internet neutral. Second, since most of the objectives initially associated with network neutrality cannot be realistically achieved by such a rule, the case for network neutrality legislation would have to stand on different grounds. Third, the fact that the Internet is not neutral is mostly a good thing for end users, who benefit from intermediaries that provide them with a selection of the over-abundant information available on the Web. Fourth, search neutrality and platform neutrality are fundamentally flawed principles that contradict the economics of the Internet. Fifth, neutrality is a very poor and ineffective recipe for media pluralism, and as such should not be invoked as the basis of future media policy. All these conclusions have important consequences for the debate on the future EU policy for the Digital Single Market.
    Date: 2015–04

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