nep-net New Economics Papers
on Network Economics
Issue of 2015‒09‒18
eight papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Banks' shareholding in multilateral trading facilities: A two-sided market perspective By Delphine Lahet; Anne-Gaël Vaubourg
  2. Balancing competition and cooperation: Evidence from transatlantic airline markets By Bilotkach, Volodymyr; Hüschelrath, Kai
  3. Entrepreneurial Activities in Europe - Expanding Networks for Inclusive Entrepreneurship By David Halabisky
  4. Network linkages to predict bank distress By Peltonen, Tuomas A.; Sarlin, Peter; Piloiu, Andreea
  5. The Diffusion of Academic Achievements: Social Selection and Influence in Student Networks By Sofia Dokuka; Diliara Valeeva; Maria Yudkevich
  6. The role of geographical proximity in the international knowledge flows of European firms: an overview of different knowledge transfer mechanisms By Chaminade , Cristina; Plechero , Monica
  7. Intrafirm Trade and Vertical Fragmentation in U.S. Multinational Corporations By Natalia Ramondo; Veronica Rappoport; Kim J. Ruhl
  8. On the emergence of scale-free production networks By Stanislao Gualdi; Antoine Mandel

  1. By: Delphine Lahet (Larefi - Laboratoire d'analyse et de recherche en économie et finance internationales - Université Montesquieu - Bordeaux 4); Anne-Gaël Vaubourg (Larefi - Laboratoire d'analyse et de recherche en économie et finance internationales - Université Montesquieu - Bordeaux 4)
    Abstract: The aim of this paper is to account for the observation that banks are both owners and clients of Multilateral Trading Facilities (MTFs) which were created in Europe after the implementation of the Markets in Financial Instruments Directive (MiFID). Using a duopoly model of two-sided markets, we show that banks' participation in MTFs crucially affects their objective function shape, pricing policy and profit. We show that when brokerage and trading activities are particularly important for banks' revenue compared to their profit as MTF operators, some market outcomes may emerge, whereby both MTFs include banks' interest as clients in their objective function. In these situations, although they earn negative profit as shareholders, banks benefit from lower fees as MTF's clients. This finally results in larger global revenue. This may explain why banks are at the origin of the creation of MTFs and why they maintain their stake despite negative profit. JEL codes: G10 G23 G24 L10 L11 L22
    Keywords: banks,shareholding,multilateral trading facilities,two-sided markets
    Date: 2015–09–04
  2. By: Bilotkach, Volodymyr; Hüschelrath, Kai
    Abstract: In the last two decades, airline alliances were not only successful in extending the size of their networks, but also received approvals by public authorities to intensify their cooperation through to merger-like revenue-sharing joint ventures (JVs). We empirically investigate the impact of the implementation of such joint ventures on both the respective airlines' competitive strategies as well as productive efficiency. Using U.S. DOT T100 International Segment data and applying airline-market fixed effects models, we find that joint ventures - compared to services with a lower degree of cooperation - lead to a 3-5 percent increase in capacity between the respective partner airlines' hub airports; however, this is done at the expense of services elsewhere in the network. Productive efficiency, as measured by load factors, is found to be 0.5-5 percent lower for joint venture routes compared to routes operated under antitrust immunity only. We use our empirical results to discuss implications for the balancing of competition and cooperation in transatlantic airline markets.
    Keywords: air transportation,alliances,antitrust immunity,efficiencies,GMM estimator
    JEL: L41 L93 K21
    Date: 2015
  3. By: David Halabisky
    Abstract: This Policy Brief explains what entrepreneurial networks are, and how disadvantaged or under-represented groups can join them. Online networks in particular offer the added advantage of removing physical distances. The document also shows that by linking target groups with the business community, and helping the networks set up and widen their scope, the policy can provide real support.
    Date: 2015–03
  4. By: Peltonen, Tuomas A.; Sarlin, Peter; Piloiu, Andreea
    Abstract: Building on the literature on systemic risk and financial contagion, the paper introduces estimated network linkages into an early-warning model to predict bank distress among European banks. We use multivariate extreme value theory to estimate equity-based tail-dependence networks, whose links proxy for the markets' view of bank interconnectedness in case of elevated financial stress. The paper finds that early warning models including estimated tail dependencies consistently outperform bank-specific benchmark models with- out networks. The results are robust to variation in model specification and also hold in relation to simpler benchmarks of contagion. Generally, this paper gives direct support for measures of interconnectedness in early-warning models, and moves toward a unified representation of cyclical and cross-sectional dimensions of systemic risk. JEL Classification: G21, G33, C54, D85
    Keywords: bank distress, bank networks, systemic risk
    Date: 2015–07
  5. By: Sofia Dokuka (National Research University Higher School of Economics); Diliara Valeeva (National Research University Higher School of Economics); Maria Yudkevich (National Research University Higher School of Economics)
    Abstract: Peer group effects show the influence of student social environments on their individual achievements. Traditionally, a social environment is considered by researchers of peer effects as exogenously given. However, significant peers that affect performance are often those that are deliberately chosen. Students might choose their friends among peers with similar academic achievements. A dynamic analysis of student social networks and academic achievements is needed to disentangle social selection and social influence processes in network formation. Using data about the friendship and advice networks of first year undergraduate students, we show that friends tend to assimilate each others’ achievements and choose advisers with similar grades. We explain these results by social segregation based on student performance. The article contributes to the dynamic analysis of student social networks and the understanding of the nature of peer group effects in education
    Keywords: social networks, academic achievements, peer group effects, higher education
    JEL: D85 I21 I23
    Date: 2015
  6. By: Chaminade , Cristina (CIRCLE, Lund University); Plechero , Monica (DEAMS – University of Trieste, Italy & CIRCLE, Lund University)
    Abstract: The paper provides an overview of the international knowledge flows in Europe particularly looking at the drivers and consequences of such flows as well as the general trend. It distinguishes between different types of mechanisms for the acquisition and transfer of knowledge from trade to research and technological collaboration, mobility of human capital and FDI. The paper is empirical in nature and targeted to a wider audience. The analysis reveals that proximity matters significantly for the mobility of human capital as well as for the establishment of collaborative networks. In both cases, intra-Europe knowledge flows are more important that extra-Europe knowledge flows, thus pointing to the role of the European market facilitating these forms of exchange. The patterns of offshoring of R&D as well as trade networks are rather different- more global than intra-European. In other words, trade and investment networks are more dispersed globally than mobility of human capital and research and technological networks.
    Keywords: Exports of high tech products; international research collaboration; international mobility of researchers; offshoring of R&D; Europe
    JEL: F20 O30
    Date: 2015–09–08
  7. By: Natalia Ramondo; Veronica Rappoport; Kim J. Ruhl
    Abstract: Using firm-level data, we document two new facts regarding intrafirm trade and the activities of the foreign affiliates of U.S. multinational corporations. First, intrafirm trade is concentrated among a small number of large affiliates within large multinational corporations; the median affiliate ships nothing to the rest of the corporation. Second, we find that the input-output coefficient linking the parent's and affiliate's industries of operation—a characteristic commonly associated with production fragmentation— is not related to a corresponding intrafirm low of goods.
    Keywords: Intrafirm trade, multinational corporations, international value chains
    JEL: F12 F14 L11 L25
    Date: 2015–09
  8. By: Stanislao Gualdi; Antoine Mandel
    Abstract: Building upon the standard model of monopolistic competition on the market for intermediary goods, we propose a simple dynamical model of the formation of production networks. The model subsumes the standard general equilibrium approach and robustly reproduces key stylized facts of firms' demographics. Firms' growth rates are negatively correlated with size and follow a core double-exponential distribution followed by fat tails. Firms' size and production network are power-law distributed. These properties emerge because continuous inflow of new firms shifts away the model from a steady state to a disequilibrium regime in which firms get scaled according to their resistance to competitive forces.
    Date: 2015–09

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