nep-net New Economics Papers
on Network Economics
Issue of 2015‒07‒04
six papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Strategic Investment Dependence and Net Neutrality By Nielsen, Martin
  2. Collective Commitment By Christian Roessler; Sandro Shelegia; Bruno Strulovici
  3. Weak Surplus Mononicity characterizes convex combination of egalitarian Shapley value and Consensus value By Koji Yokote; Yukihiko Funaki
  4. The Economics of Television and Online Video Markets By Crawford, Gregory S
  5. How Social Networks Shape Our Beliefs: A Natural Experiment among Future French Politicians By Yann Algan; Quoc-Anh Do; Nicolò Dalvit; Alexis Le Chapelain; Yves Zenou
  6. Ordinal and cardinal solution concepts for two-sided matching By Federico Echenique; Alfred Galichon

  1. By: Nielsen, Martin (Department of Business and Economics)
    Abstract: This paper analyzes the way payments by content providers to an Internet service provider may affect investment in Internet speed and content quality. It derives payment mechanisms capable of aligning investment incentives between the two groups; in fact, some of them are Pareto-improving also for consumers, who are willing to pay for quality of content. On the other hand, some parameter combinations may require public intervention for Pareto improvement to be attained.
    Keywords: Internet regulation; Network neutrality; Investment incentives; Monopoly; Duopoly; Regulation; Internet content; Netflix; Internet service providers; AT&T; Verizon; Comcast
    JEL: C72 D42 D43 L12 L13 L14
    Date: 2015–06–29
  2. By: Christian Roessler; Sandro Shelegia; Bruno Strulovici
    Abstract: We consider collective decisions made by agents whose preferences and power depend on past events and decisions. Faced with an inecient equilibrium and an opportunity to commit to a policy, can the agents reach an agreement on such a policy? Under an intuitive condition linking power structures in the dynamic setting and at the commitment stage, the answer is negative: when the condition holds, the only agreement that may be reached at the outset, if any, coincides with the equilibrium without commitment. The condition is also necessary: when it fails, as in the case of a single time-inconsistent agent, commitment is valuable for some payos. We apply our result to explain inecient collective decisions in the contexts of investment in a public good, hiring, and reform.
    JEL: D70 H41 C70
    Date: 2015–06
  3. By: Koji Yokote (Graduate School of Economics, Waseda University); Yukihiko Funaki (Faculty of Political Science and Economics, Waseda University)
    Abstract: We deal with the problem of striking a balance between marginal- ism and egalitarianism in the class of TU cooperative games. We introduce a new axiom, Weak Surplus Monotonicity. It states that if the marginal contribution of a player increases, the worth of the grand coalition increases and the cooperative surplus increases, then the pay- off of the player should also increase. We show that a solution satisfies Efficiency, Symmetry and Weak Surplus Monotonicity if and only if it is a convex combination of the Shapley value, the Equal division and the CIS value. By replacing the new axiom with a stronger axiom and taking the dual, we obtain 11 characterizations of solutions, including the results of Young (1985) or Casajus and Huettner (2014).
    Keywords: TU game; Shapley value; Monotonicity; Axiomatization
    JEL: C71
    Date: 2015–06
  4. By: Crawford, Gregory S
    Abstract: Television is the dominant entertainment medium for hundreds of millions. This chapter surveys the economic forces that determine the production and consumption of this content. It presents recent trends in television and online video markets, both in the US and internationally, and describes the state of theoretical and empirical research on these industries. A number of distinct themes emerge, including the growing importance of the pay-television sector, the role played by content providers (channels), distributors, and negotiations between them in determining market outcomes, and concerns about the effects of market power throughout this vertical structure. It also covers important but unsettled topics including the purpose for and effects of both the old (Public Service Broadcasters) and the new (online video markets). Open theoretical and empirical research questions are highlighted throughout.
    Keywords: advertising; bargaining; bundling; economics; foreclosure; market power; net neutrality; online video; pay television; public service broadcasting; television
    JEL: C72 D40 L32 L40 L50 L82 L86 M37
    Date: 2015–06
  5. By: Yann Algan (Département d'économie); Quoc-Anh Do (Département d'économie); Nicolò Dalvit (Departement d'Economie de Sciences Po, LIEPP); Alexis Le Chapelain (Département d'économie); Yves Zenou (Research Institute of Industrial Economics)
    Abstract: This paper shows how a public policy shapes convergence of beliefs through newly-formed social networks, with a focus on political opinion. We use a unique natural experiment that randomly assigns students into first-year groups at a French college that forms future top politicians. Pairs of students in the same group are much more likely to become friends. The randomized group membership serves as instrumental variable in a dyadic regression of differences in beliefs on friendship. We find that students’ political opinions converge particularly strongly between friends, reaching 11% of a standard deviation only after 6 months. Convergence is strongest among pairs least likely to become friends without the randomized exposure, or friends whose characteristics are the most different. While there is evidence of homophily in network formation, it does not seem to affect the estimates of convergence, except among very similar friends. The same strategy shows that a longer network distance implies slower convergence.
    Keywords: Political Beliefs; Peers; Social Networks; Convergence; Homophily; Belief Transmission; Learning; Diffusion; Natural Experiment
    JEL: C93 D72 Z13
    Date: 2015–06
  6. By: Federico Echenique (California Institute of Technology (Caltech)); Alfred Galichon (Département d'économie)
    Abstract: We characterize solutions for two-sided matching, both in the transferable - and in the nontransferable - utility frameworks, using a cardinal formulation. Our approach makes the comparison of the matching models with and without transfers particularly transparent. We introduce the concept of a no-trade matching to study the role of transfers in matching. A no-trade matching is one in which the availability of transfers do not affect the outcome.
    Keywords: Matching; Stability; Efficiency
    JEL: C78
    Date: 2014–04

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