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on Network Economics |
| By: | Mariya Teteryatnikova |
| Abstract: | We propose a new notion of farsighted pairwise stability for dynamic network formation which includes two notable features: consideration of intermediate payos and cautiousness. This diers from existing concepts which typically consider either only immediate or nal payos, and which often require a certain amount of optimism on the part of the players in any environment without full communication and commitment. We show that for an arbitrary denition of preferences over the process of network formation, a non-empty cautious path stable set of networks always exists, and provide a characterization of this set. Strongly ecient networks do not always belong to a cautious path stable set for a common range of preference specications. But if there exists a Pareto dominant network and players value payos in a nal network most, then this Pareto dominant network is the unique prediction of the cautious path stable set. Finally, in the special case where players derive utility only from a nal network, we study the relationship between cautious path stability and a number of other farsighted concepts, including pairwise farsightedly stable set and von Neumann-Morgenstern pairwise farsightedly stable set. |
| JEL: | A14 C71 C92 D85 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:vie:viennp:1509&r=net |
| By: | Beltran, Daniel O. (Board of Governors of the Federal Reserve System (U.S.)); Bolotnyy, Valentin (Harvard University); Klee, Elizabeth C. (Board of Governors of the Federal Reserve System (U.S.)) |
| Abstract: | Using a network approach to characterize the evolution of the federal funds market during the Great Recession and financial crisis of 2007-2008, we document that many small federal funds lenders began reducing their lending to larger institutions in the core of the network starting in mid-2007. But an abrupt change occurred in the fall of 2008, when small lenders left the federal funds market en masse and those that remained lent smaller amounts, less frequently. We then test whether changes in lending patterns within key components of the network were associated with increases in counterparty and liquidity risk of banks that make up the core of the network. Using both aggregate and bank-level network metrics, we find that increases in counterparty and liquidity risk are associated with reduced lending activity within the network. We also contribute some new ways of visualizing financial networks. |
| Keywords: | Banks; credit unions; and other financial institutions; counterparty credit risk; data visualization; network models |
| JEL: | E50 G20 |
| Date: | 2015–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2015-55&r=net |
| By: | Ivaldi, Marc; Sokullu, Senay; Toru, Tuba |
| Abstract: | This paper analyzes the rationale of airport business models. First, it provides evidence that the airports should be considered as two sided markets because of significant network externalities between the airlines and the passengers. This result invalidates the traditional approach where the airport-airline-passenger relationship is considered as vertically integrated, taking passengers as final consumers. Second, a testing procedure aimed at eliciting the real business model of airports demonstrates that the major U.S. airports do not internalize the externalities existing between airlines and passengers. We find that these airports set profit maximizing prices for the non-aeronautical services to passengers and Ramsey prices for the aeronautical services to airlines. Given these results, we conduct a welfare analysis by simulating the implementation of profit maximizing prices when an airport fully accounts for the two-sidedness of its activities. In particular, we show that the impact on social welfare is not independent on the specific features of each airport and that the privatization of airports cannot be considered as the only solution for airports. |
| Keywords: | Two-sided markets, Airport pricing, Airport regulation |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:29375&r=net |
| By: | Estelle Malavolti (TSE - Toulouse School of Economics - Toulouse School of Economics, LEEA - ENAC - Laboratoire d'Economie et d'Econométrie de l'Aérien - PRES Université de Toulouse - Ecole Nationale de l'Aviation Civile) |
| Abstract: | Big airports profits are more and more often coming from commercial activities such as retailing. However, commercial services are relatively far from the original mission of the airport: providing airlines with aviation services such as ground handling, terminal management or airside operations, and being regulated for that because of an obvious dominant position with respect to airlines. For this reason, one can advocate for the separation of the two activities, i.e. for a dual till approach, in which only the aeronautical activity is regulated. We, instead, suggest that a single till regulation, in which the total profit of the airport is examined, is relevant because it allows to take into account the externalities existing between retailing and aeronautical services. Using a two-sided market approach (Armstrong 2006, Rochet-Tirole 2003, 2006), we show that the airport is a platform which makes the shops and the passengers meet. The retailing activity depends on how many passengers are circulating and connecting at the airport, as well as the time they spent in the airport, while passengers value the least connecting time as possible. We show that the aeronautical tax can be either higher or lower under single till depending on whether the impact of the passengers demand or of the waiting time is the more important for the shops. |
| Date: | 2015–01–26 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01109445&r=net |
| By: | Timothy Conley; Nirav Mehta; Ralph Stinebrickner; Todd Stinebrickner |
| Abstract: | We develop and estimate an equilibrium model of study time choices of students on a social network. We examine how network structure interacts with student characteristics to affect academic achievement. Due to data limitations, few papers examine the mechanisms through which peer effects operate. The model is designed to exploit unique data collected in the Berea Panel Study. Study time data allow us to quantify an intuitive mechanism for social interactions: the cost of own study time may depend on friend study time. Social network data allow study time choices and resulting academic achievement to be embedded in an equilibrium framework. We find friend study time strongly affects own study time, and, therefore, student achievement. Not taking into account equilibrium behavior would drastically understate the effect of peers. Sorting on friend characteristics appears important in explaining variation across students in study time and achievement, and determines the aggregate achievement level. |
| JEL: | H0 I20 J0 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21418&r=net |
| By: | Yann Le Roch (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris, 4S Network); Eric Ballot (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Xavier Perraudin (4S Network) |
| Abstract: | New logistics models – physical internet, pooling, control towers, re-usable containers management – require an item-level traceability of physical shipping units that is independent of the partners involved in the supply chains. Current information systems architectures match this need by interfacing heter-ogeneous systems with each other. Such architecture can't meet the challenges brought by new and shared logistics models. We demonstrate here how the re-cent EPCglobal® standards and related technologies are settled in a multi-firm open network, applied to the management of reusable pallets, taken here as de-monstrators of Open Tracing Containers (OTC). Material and methods for cap-turing data and structuring information are proposed and implemented in the Fast Moving Consumer Goods flows. Results illustrate the reach of that "Intra-net of things" prototype, leading to interoperable logistic services, throughout various levels: from identifier tag level up to the piloting of each partner's lo-gistics networks. We highlight limits and perspectives in terms of technical track and trace solutions and assets management in this environment. |
| Date: | 2014–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01082529&r=net |
| By: | Mert Demirer (MIT); Francis X. Diebold (University of Pennsylvania); Laura Liu (University of Pennsylvania); Kamil Yilmaz (Koc University) |
| Abstract: | We use lasso methods to shrink, select and estimate the network linking the publicly-traded subset of the world's top 150 banks, 2003-2014. We characterize static network connectedness using full-sample estimation and dynamic network connectedness using rolling-window estimation. Statistically, we find that global banking connectedness is clearly linked to bank location, not bank assets. Dynamically, we find that global banking connectedness displays both secular and cyclical variation. The secular variation corresponds to gradual increases/decreases during episodes of gradual increases/decreases in global market integration. The cyclical variation corresponds to sharp increases during crises, involving mostly cross-country, as opposed to within-country, bank linkages. |
| Keywords: | Systemic risk, connectedness, systemically important financial institutions, vector autoregression, variance decomposition, lasso, elastic net, adaptive lasso, adaptive elastic net. |
| JEL: | C32 G21 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:koc:wpaper:1512&r=net |
| By: | Jitendra Aswani (Indira Gandhi Institute of Development Research) |
| Abstract: | As importance of Asian Stock Markets (ASM) has increased after the globalization, it is become significant to know how this network of ASM behaves on the onset of financial crises. For this study, the Global Financial Crisis is considered whose origin was in the developed country, US, unlike the Asian crisis of 1997. To evaluate the impact of financial crisis on the ASM, network theory is used as a tool here. Network modeling of stock markets is useful as it can help to avert the spillover of crises by preventing the stock markets which are highly connected in the network. In this empirical work, weekly indices data from 2000-2013 for fifteen stock markets is used, which is further partitioned into three periods: pre, during and post crisis. This study shows how 13 important stock markets in Asia namely, India, Bangladesh, Philippines, China, Japan, Indonesia, Malaysia, Singapore, Hong Kong, Pakistan, South Korea and Thailand are connected to each other and how India, Japan, Hong Kong and Korea stock market appeared as the systemically important stock markets from them. Introduction of the US stock market into this network gives insight how the US stock market might had connected to systemically important markets which resulted into spread of crisis in the Asian region. Furthermore, using Kruskal algorithm spread of contagion is explained like how it first hit the Hong Kong stock market and from there it proceeds to the other systemic important stock markets like a virus. Addition to that, we quantified the network behavior in the form of metrics such as adjacency matrix, clustering coefficient, degree of nodes and Minimum Spanning Tree (MST), and on the basis of these some of the important questions like which stock markets are highly connected in Asia which if affected can induce the crises in the other stock markets of region are answered. This study can be used for the portfolio optimization as well as for policy making for which network analysis should be conducted on a regular basis. |
| Keywords: | Financial Crisis, Stock Markets, Networks, Minimum Spanning Tree |
| JEL: | C45 G1 G11 G15 P34 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:ind:igiwpp:2015-020&r=net |
| By: | Toshihiro Yokoo; David Levinson (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota) |
| Abstract: | This paper analyzes the relationship between road network structure and the percentage of speeding using GPS data collected from 152 individuals over a 7 day period. To investigate the relationship, we develop an algorithm and process to match the GPS data and GIS data accurately. Comparing actual travel speed from GPS data with posted speed limits we measure where and when speeding occurs, by whom. We posit that road network structure shapes the decision to speed. Our result shows that the percentage of speeding, which is calculated by travel distance, is large in high speed limit zones (e.g. 60 mph ) and low speed limit zone (less than 25 mph); in contrast, the percentage of speeding is much lower in the 30 - 50 mph zone. The results suggest driving pattern depends on the road type. We also find that if there are many intersections in the road, average link speed (and speeding) drops. Long links are conducive to speeding. |
| Keywords: | GPS data, speeding, travel behavior |
| JEL: | K42 R41 R42 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:nex:wpaper:speeding&r=net |