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on Network Economics |
| By: | Shugo Yamamoto |
| Abstract: | The global factor often referred to as the volatility index (VIX) is said to be the most important determinant of cross-border bank flows. Contrary to established theory, we investigate the spatial amplification of the network origins of the aggregate fluctuation effect on cross-border bank flows. Results show that first, amplification effects from networks of core?core countries can explain a large share of global shocks, which will replace VIX. Second, because the US is located at the core of the network, the US amplifies shock originating in other countries. Furthermore, monetary policy shocks originating in the US have large amplification effects not only the US itself, but also on the rest of the world. Therefore, domestic shocks apparently propagate throughout the international banking network, affecting other countries, and generating a sizable global factor. |
| Keywords: | Core?periphery; Global factor; Spatial effect; VIX |
| JEL: | F30 F34 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:koe:wpaper:1533&r=net |
| By: | Andreas Karpf (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Antoine Mandel (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Stefano Battiston (Department of Banking and Finance - UZH - University of Zürich [Zürich]) |
| Abstract: | This paper analyses the European Emission Trading System (ETS) from a network perspective. It is shown that the network exhibits a strong core-periphery structure also reflected in the network formation process. Due to a lack of centralized market places, operators of installations which fall under the EU ETS regulations have to resort to local networks or financial intermediaries if they want to participate in the market. This undermines the central idea of the ETS to exploit marginal abatement costs. |
| Keywords: | network,emission market,ETS,network topology |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-01243694&r=net |
| By: | Edward L. Glaeser; Giacomo A. M. Ponzetto; Yimei Zou |
| Abstract: | Should China build mega-cities or a network of linked middle-sized metropolises? Can Europe’s mid-sized cities compete with global agglomeration by forging stronger inter-urban links? This paper examines these questions within a model of recombinant growth and endogenous local amenities. Three primary factors determine the trade-off between networks and big cities: local returns to scale in innovation, the elasticity of housing supply, and the importance of local amenities. Even if there are global increasing returns, the returns to local scale in innovation may be decreasing, and that makes networks more appealing than mega-cities. Inelastic housing supply makes it harder to supply more space in dense confines, which perhaps explains why networks are more popular in regulated Europe than in the American Sunbelt. Larger cities can dominate networks because of amenities, as long as the benefits of scale overwhelm the downsides of density. In our framework, the skilled are more likely to prefer mega-cities than the less skilled, and the long-run benefits of either mega-cities or networks may be quite different from the short-run benefits. |
| JEL: | F15 O18 R10 R58 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21794&r=net |
| By: | V. A. Kalyagin; P. A. Koldanov; P. M. Pardalos |
| Abstract: | Investigation of the market graph attracts a growing attention in market network analysis. One of the important problem connected with market graph is to identify it from observations. Traditional way for the market graph identification is to use a simple procedure based on statistical estimations of Pearson correlations between pairs of stocks. Recently a new class of statistical procedures for the market graph identification was introduced and optimality of these procedures in Pearson correlation Gaussian network was proved. However the obtained procedures have a high reliability only for Gaussian multivariate distributions of stocks attributes. One of the way to correct this drawback is to consider a different networks generated by different measures of pairwise similarity of stocks. A new and promising model in this context is the sign similarity network. In the present paper the market graph identification problem in sign similarity network is considered. A new class of statistical procedures for the market graph identification is introduced and optimality of these procedures is proved. Numerical experiments detect essential difference in quality of optimal procedures in sign similarity and Pearson correlation networks. In particular it is observed that the quality of optimal identification procedure in sign similarity network is not sensitive to the assumptions on distribution of stocks attributes. |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1512.06449&r=net |
| By: | OKUBO Toshihiro; OKAZAKI Tetsuji |
| Abstract: | In 2001, the Ministry of Economy, Trade and Industry (METI) launched the Industrial Cluster Policy, which aimed at promoting innovations and vitalizing regional economies by creating firm networks. The model envisioned by METI in drawing up this policy was the Silicon Valley in the United States. For that purpose, METI designated 19 industrial clusters and their members, including local small and medium-sized firms and universities, and supported the network creation of the members. In this paper, we identified the member firms from the original information provided by METI and matched it with the Tokyo Shoko Research (TSR) database. We used the dataset to evaluate how participation in the industrial cluster affected the transaction network, sales, and employment of each member firm.It was revealed that participation in the industrial cluster has a positive impact on the extent of transaction networks, especially that with firms in Tokyo. Also, participation in the industrial cluster increases the sales and employment of each member firm. It is remarkable that the cluster policy contributes to expanding the extensive margin of the local firms with transactions with firms in Tokyo. This extensive margin effect is larger for firms whose main banks are the first-tier regional banks. |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:15063&r=net |
| By: | Dietzenbacher, Bas (Tilburg University, Center For Economic Research); Borm, Peter (Tilburg University, Center For Economic Research); Hendrickx, Ruud (Tilburg University, Center For Economic Research) |
| Abstract: | Using network control structures this paper introduces network communication<br/>games as a generalization of vertex games and edge games corresponding to communication situations and studies their decomposition into unanimity games. We obtain a relation between the dividends of the network communication game and the underlying transferable utility game, which depends on the structure of the undirected graph. This relation extends the computational results for tree communication networks to general undirected graphs and is used to derive new characterizations of the Myerson value and the position value. Moreover, network communication games also allow to consider<br/>both the vertices and the edges of the graph as players, leading to a new network value. |
| Keywords: | network communication games; network control structures; decomposition theorems; Myerson value; position value |
| JEL: | C71 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:c07a09b0-0bd7-4533-ac99-3fe2d1b43b98&r=net |
| By: | Daniele Nosenzo (Department of Economics, University of Nottingham.); Fabio Tufano (Department of Economics, University of Nottingham.) |
| Abstract: | We study the effects of voluntary participation on cooperation in collective action problems. Voluntary participation may foster cooperation through an entry mechanism, which leads to assortative selection of interaction partners, or an exit mechanism, whereby the opportunity to leave the partnership can be used as a threat against free-riders. We examine the effectiveness of these mechanisms in a one-shot public goods experiment. Voluntary participation has a positive effect on provision only through the exit mechanism. Assortative selection of interaction partners seems to play a minor role in our setting, whereas the threat of costly exit is a powerful force to discipline free-riding. |
| Keywords: | public goods; cooperation; voluntary participation; exit; entry; experiment |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2015-20&r=net |
| By: | Richard W. Carney (Australian National University, Australia); Travers Barclay Child (VU University Amsterdam, the Netherlands) |
| Abstract: | Do political ties, family-business group affiliation, and professional connections collectively matter for firm performance? By exploiting a new dataset for 1,290 large East Asian firms during the 2008 financial crisis, we offer a holistic comparison of these different networks. We find that professional networks buoyed performance; political and family networks did not. This suggests information access is a key benefit of business networks. A one standard deviation improvement to a firm's professional network position cushioned quarterly ROA by 2/5 of a percentage point during the crisis. |
| Keywords: | networks; political connections; interlocking directorates; family ownership; corporate governance |
| JEL: | G3 G14 L14 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150135&r=net |
| By: | Michael D. König; Dominic Rohner; Mathias Thoenig; Fabrizio Zilibotti |
| Abstract: | We study from both a theoretical and an empirical perspective how a network of military alliances and enmities affects the intensity of a conflict. The model combines elements from network theory and from the politico-economic theory of conflict. We postulate a Tullock contest success function augmented by an externality: each group’s strength is increased by the fighting effort of its allies, and weakened by the fighting effort of its rivals. We obtain a closed form characterization of the Nash equilibrium of the fighting game, and of how the network structure affects individual and total fighting efforts. We then perform an empirical analysis using data on the Second CongoWar, a conflict that involves many groups in a complex network of informal alliances and rivalries. We es- timate the fighting externalities, and use these to infer the extent to which the conflict intensity can be reduced through (i) removing individual groups involved in the conflict; (ii) pacification policies aimed at alleviating animosity among groups. |
| Keywords: | Africa, alliances, civil conflict, Congo War, contest success function, enmities, network, rainfall |
| JEL: | C36 C72 D74 D85 F51 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:zur:uceswp:014&r=net |
| By: | Bulat Sanditov (TELECOM Ecole de Management, Institut Mines-T´el´ecom, France); Saurabh Arora (Science Policy Research Unit, University of Sussex, UK) |
| Abstract: | Using a simple model with interdependent utilities, we study how social networks influence individual voluntary contributions to the provision of a public good. Departing from the stan- dard model of public good provision, we assume that an agent’s utility has two terms: (a) ‘ego’-utility derived from the agent’s consumption of public and private goods, and (b) a so- cial utility which is the sum of utility spillovers from other agents with whom the agent has social relationships. We establish conditions for the existence of a unique interior Nash equi- librium and describe the equilibrium in terms of network characteristics. We show that social network always has a positive effect on the provision of the public good. We also find that, in networks with “small world”-like modular structures, ‘bridging’ ties connecting distant parts of social network play an important role inducing the agent’s contribution to public good. Assumptions and results of the model are discussed in relation to the role of social capital in community-level development projects and to the effect of innovation networks on firms’ R&D investments. |
| Keywords: | public goods, interrelated utilities, social capital, R&D networks |
| JEL: | H41 D85 O31 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:sru:ssewps:2015-35&r=net |