nep-net New Economics Papers
on Network Economics
Issue of 2015‒12‒01
seven papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Resale price maintenance in two-sided markets By Gabrielsen, Tommy S.; Johansen, Bjørn Olav; Lømo, Teis L.
  2. Retail Networks and Real Estate: the case of Swiss luxury watches in China and Southeast By Tatsuro Iwaisako; Kazuyoshi Ohki
  3. The organization of the interbank network and how ECB unconventional measures affected the e-MID overnight market By Paolo Barucca; Fabrizio Lillo
  4. Development of High-speed Networks and the Role of Municipal Networks By Sam Paltridge
  5. A Discontinuity Model of Technological Change: Catastrophe Theory and Network Structure By Heinrich, Torsten
  6. Net Neutrality, Vertical Integration, and Competition Between Content Providers By Juliane Fudickar
  7. Backbone of credit relationships in the Japanese credit market By Luca Marotta; Salvatore Miccich\`e; Yoshi Fujiwara; Hiroshi Iyetomi; Hideaki Aoyama; Mauro Gallegati; Rosario N. Mantegna

  1. By: Gabrielsen, Tommy S. (Department of Economics, University of Bergen); Johansen, Bjørn Olav (Department of Economics, University of Bergen); Lømo, Teis L. (Department of Economics, University of Bergen)
    Abstract: In many two-sided markets, platforms use intermediary agents to reach consumers at one side of the market. In addition to the usual externalities in two-sided markets, the use of agents creates an additional externality for the platforms. We study if and how competing platforms can internalize the externalities by imposing resale price maintenance (RPM) on the agents. By the appropriate use of RPM, the platforms can induce the fully integrated outcome. Using a speci…c example, we show that consumers’surplus is reduced when the equilibrium involves the use of minimum RPM, and consumers benefi…t when maximum RPM is used.
    Keywords: Two-sided markets; resale price maintenance
    JEL: L13 L41 L42
    Date: 2015–11–25
  2. By: Tatsuro Iwaisako (Graduate School of Economics, Osaka University); Kazuyoshi Ohki (Graduate School of Economics, Osaka University)
    Abstract: We develop a Schumpeterian growth model that differs from the quality-ladder model in the following two ways. First, the size of the quality increment is determined by a random draw from a given distribution, and consequently leader firms are different in terms of their quality lead over their followers, and thus have different profit flows. Second, we assume that the R&D technology of leader firms exhibits diminishing returns, and consequently some leader firms engage in R&D activities. The results show that leaders with larger quality leads over their followers make smaller R&D investments and tend to be replaced more rapidly; this result is consistent with the behaviors of some previous leader firms such as Sony and Eastman-Kodak. Moreover, we show that subsidizing followersf R&D can promote leadersf aggregate R&D. Subsidies for followersf R&D promote their R&D and impede individual leader firmsf R&D. However, promotion of followersf R&D decreases the number of leaders with larger quality leads and smaller R&D investments and increases that of leaders with smaller quality leads and larger R&D investments. If this positive effect from a changed distribution outweighs the negative effects on individual firmsf R&D, promotion of followersf R&D increases leadersf aggregate R&D.
    Keywords: Schumpeterian growth; Heterogeneous leaders; R&D subsidies
    JEL: L16 O31 O38
    Date: 2015–11
  3. By: Paolo Barucca; Fabrizio Lillo
    Abstract: The properties of the interbank market have been discussed widely in the literature. However a proper model selection between alternative organizations of the network in a small number of blocks, for example bipartite, core-periphery, and modular, has not been performed. In this paper, by inferring a Stochastic Block Model on the e-MID interbank market in the period 2010-2014, we show that in normal conditions the network is organized either as a bipartite structure or as a three community structure, where a group of intermediaries mediates between borrowers and lenders. In exceptional conditions, such as after LTRO, one of the most important unconventional measure by ECB at the beginning of 2012, the most likely structure becomes a random one and only in 2014 the e-MID market went back to a normal bipartite organization. By investigating the strategy of individual banks, we show that the disappearance of many lending banks and the strategy switch of a very small set of banks from borrower to lender is likely at the origin of this structural change.
    Date: 2015–11
  4. By: Sam Paltridge
    Abstract: All OECD countries recognise the benefits that stem from high speed broadband networks and have made tremendous progress in recent years in fostering their deployment. Nonetheless, many challenges remain in terms of how to enhance and expand these networks to meet the growing demands of an increasingly digital economy and society. Although private investments have been the overwhelming source of finance for high speed networks in OECD countries, municipal networks have been used in a number of OECD countries to fill gaps or provide substantial areas of service in a region, city or smaller town and surrounding locations. This report examines some of the experience with these municipal broadband networks in selected OECD countries. Municipal networks are defined here as high speed networks that have been fully or partially facilitated, built, operated or financed by local governments, public bodies, utilities, organisations, or co-operatives that have some type of public involvement. The models and experience of these networks have varied from being highly successful to not meeting expectations. In some cases, they have provided welcome competition by offering an alternative infrastructure and have opened the market for retail Internet service providers by separating the basic infrastructure from services. In other cases, they have enabled the use of shared infrastructure. Some have built on a long tradition of municipalities providing services from entities owned by them, such as the provision of utility services like energy, water, gas, or cable television. Some have involved public private partnerships, others have been privatised following initial public ownership and some are community driven.
    Date: 2015–11–25
  5. By: Heinrich, Torsten
    Abstract: Discontinuities as a crucial aspect of economic systems have been discussed both verbally - particularly in institutionalist theory - and formally, chiefly using catastrophe theory. Catastrophe theory has, however, been criticized heavily for lacking micro-foundations and has mainly fallen out of use in economics and social sciences. The present paper proposes a simple catastrophe theory model of technological change with network externalities and reevaluates the value of such a model by adding an agent-based micro layer. To this end an agent-based variant of the model is proposed and investigated specifically with regard to the network structure among the agents. While the macro level of the model produces a classical cusp catastrophe - a result that is preserved in the agent-based form - it is found that the behavior of the model changes locally depending on the network structure, especially if networks with features that resemble social networks (low diameter, high clustering, power law distributed node degree) are considered. While the present work investigates merely an aspect out of a large possibility space, it encourages further research using agent-based catastrophe theory models especially of economic aspects to which catastrophe theory has previously successfully been applied; aspects such as technological and institutional change, economic crises, or industry structure.
    Keywords: network structures; agent-based modeling; catastrophe theory; information and communication technology; preferential attachment networks; technological change
    JEL: C63 D85 L14 L86
    Date: 2015–02–26
  6. By: Juliane Fudickar (Freie Universität Berlin)
    Abstract: This paper investigates the effects of a net neutrality regulation on the competition between content providers and the investment incentives of the internet service provider. We consider a situation where the monopoly internet service provider is vertically integrated with one of the content providers, and content providers compete in prices. Without net neutrality the vertical integrated firm can prioritise the delivery of its own content. We find that, under prioritisation, the integrated internet service provider and consumers as a whole are unambiguously better off. The competing content providers might also be better off under prioritisation if the congestion intensity is high. From a social welfare perspective prioritisation is also desirable unless product differentiation and congestion intensity are low. Contrary to some claims by internet service providers, we find that investment incentives are not always higher under prioritisation.
    Keywords: Vertical integration, Network neutrality, Competition, Investment
    JEL: L13 L41 L42 L88
    Date: 2015–09–07
  7. By: Luca Marotta; Salvatore Miccich\`e; Yoshi Fujiwara; Hiroshi Iyetomi; Hideaki Aoyama; Mauro Gallegati; Rosario N. Mantegna
    Abstract: We detect the backbone of the weighted bipartite network of the Japanese credit market relationships. The backbone is detected by adapting a general method used in the investigation of weighted networks. With this approach we detect a backbone that is statistically validated against a null hypothesis of uniform diversification of loans for banks and firms. Our investigation is done year by year and it covers more than thirty years during the period from 1980 to 2011. We relate some of our findings with economic events that have characterized the Japanese credit market during the last years. The study of the time evolution of the backbone allows us to detect changes occurred in network size, fraction of credit explained, and attributes characterizing the banks and the firms present in the backbone.
    Date: 2015–11

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