nep-net New Economics Papers
on Network Economics
Issue of 2016‒02‒17
ten papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. The platformization of digital markets: Comments on the public consultation of the European Commission on the regulatory environment for platforms, online intermediaries, data and cloud computing and the collaborative economy By Demary, Vera
  2. Purchase, Pirate, Publicize: The Effect of File Sharing on Album Sales By Jonathan Lee
  3. The Importance of Peers for Compliance with Norms of Fair Sharing By Gächter, Simon; Gerhards, Leonie; Nosenzo, Daniele
  4. Learning faster or more precisely? Strategic experimentation in networks By Wuggenig, Mirjam
  5. On the Impact of Quotas and Decision Rules in Ultimatum Collective Bargaining By Grimm, Veronika; Feicht, Robert; Rau, Holger; Stephan, Gesine
  6. Leader Networks and Transaction Costs: A Chinese Experiment in Interjurisdictional Contracting By Chau, Nancy; Qin, Yu; Zhang, Weiwen
  7. Heterogeneous peer effects in education By Eleonora Patacchini; Edoardo Rainone; Yves Zenou
  8. Contagion and fire sales in banking networks By Sara Cecchetti; Marco Rocco; Laura Sigalotti
  9. Strategic Formation of Homogeneous Bargaining Networks By Gauer, Florian
  10. Local and Global Pollution and International Environmental Agreements in a Network Approach By Günther, Michael; Hellmann, Tim

  1. By: Demary, Vera
    Abstract: Online platforms play an increasingly important role in the European business landscape. Guided by questions from the European Commission's consultation on this topic, the paper aims to provide insight into the characteristics of online platforms and the resulting regulatory challenges. Issues such as the transparency of platforms or the organization of the Sharing Economy are currently under debate. Generally speaking, one main concern is that online platforms do not account for their users' interests sufficiently, resulting in hardly desirable market outcomes. The paper provides economic reasoning as to why this concern is not always justified and suggests possible policy measures in cases where regulatory action is necessary. The most important aspect being currently discussed in this context is the access to and the use of data. Data are at the center of most online platforms' business models. While regulation to ensure data protection is naturally important, this aspect is the main reason to refrain from overbearing regulation and to emphasize a rule-of-reason approach. European policy-makers need to find the balance between consumer protection and fostering new innovative business models.
    JEL: L14 L41 O33
    Date: 2015
  2. By: Jonathan Lee (Queen's University)
    Abstract: This paper quantifies the relationship between private-network file sharing activity and music sales in the BitTorrent era. Using a panel dataset of 2,251 albums' U.S. sales and file sharing downloads on a private network during 2008, I estimate the effect of file sharing on album sales. Exogenous shocks to file sharing capacity address the simultaneity problem. In theory, piracy could crowd out legitimate sales by building file sharing capacity, but could also increase sales through word-of-mouth. I find evidence that additional file sharing decreases physical sales but increases digital sales for top-tier artists, though the effects are modest. I also find that file sharing may help mid-tier artists and substantially harms bottom-tier artists, suggesting that file sharing enables consumers to better discern quality among lesser-known artists.
    Keywords: intellectual property, copyright, file sharing, piracy, digital music
    JEL: L82 L86 O34
    Date: 2016–01
  3. By: Gächter, Simon (University of Nottingham); Gerhards, Leonie (University of Hamburg); Nosenzo, Daniele (University of Nottingham)
    Abstract: A burgeoning literature in economics has started examining the role of social norms in explaining economic behavior. Surprisingly, the vast majority of this literature has studied social norms in asocial decision settings, where individuals are observed to act in isolation from each other. In this paper we use a large-scale dictator game experiment (N = 850) to show that the presence of "peers" in the decision setting faced by an individual can have a profound influence on the individual's perception of the decision situation and its underlying norms of sharing, as elicited in an incentive compatible way. However, we find limited evidence that this influence of peers in normative considerations translates into a corresponding effect in actual behavior. Partly, this is due to substantial heterogeneity in the extent to which dictators in our sample are willing to comply with norms of fair sharing.
    Keywords: social norms, norm compliance, peer effects, fair sharing, dictator game, framing, experiments
    JEL: A13 C92 D03
    Date: 2015–12
  4. By: Wuggenig, Mirjam
    Abstract: The paper analyzes a dynamic model of rational strategic learning in a network. It complements existing literature by providing a detailed picture of short-run dynamics in a game of strategic experimentation where agents are located in a social network. We show that the delay in information transmission caused by incomplete network structures may induce players to increase own experimentation efforts. As a consequence a complete network can fail to be optimal even if there are no costs for links. This means that in the design of networks there exists a trade-off between the speed of learning and accuracy.
    JEL: C73 D83 D85
    Date: 2015
  5. By: Grimm, Veronika; Feicht, Robert; Rau, Holger; Stephan, Gesine
    Abstract: We conduct multi-person one-shot ultimatum games that reflect important aspects of collective bargaining. In all treatments a proposer has to divide a pie among herself and six recipients that are divided into two groups of three. The proposer cannot discriminate among, but across group members. Acceptance decisions are taken by a committee of three representatives from one or both groups. In a 2x2 design we vary (i) representation in the decision committee (one vs. both groups) and (ii) the decision rule (unanimity vs. majority voting). We find that (i) representation of a group in the committee is crucial for receiving a significant share, (ii), proposals are more balanced if both groups have veto power (iii) acceptance rates are only high when the environment gives a clear idea of what an appropriate proposal is. Non--binding communication reduces rejection rates and proposer shares.
    JEL: C92 C78 C91
    Date: 2015
  6. By: Chau, Nancy (Cornell University); Qin, Yu (National University of Singapore); Zhang, Weiwen (Zhejiang University)
    Abstract: Do leader networks promote efficient intergovernmental contracts? We examine a groundbreaking policy in China where subprovincial governments freely traded land conversion quotas, and investigate the role of leader networks on the boundary between jurisdictions that embrace trade versus autarky. Consistent with the presence of Williamsonian transaction costs featuring uncertainty, incomplete contracting, and asset specificity, we find that leader career networks facilitate trade, controlling for institutional similarity and prior trade relations. However, trade gains can be limited if leader networks offer selective coverage. Using data from the Chinese experiment, we find evidence consistent with trade match distortions induced by leader networks.
    Keywords: transaction cost, government leader network, interjurisdictional contracting
    JEL: H11 H77 P35 R52 D23
    Date: 2016–01
  7. By: Eleonora Patacchini (Cornell University); Edoardo Rainone (Banca d'Italia); Yves Zenou (Stockholm University)
    Abstract: We investigate whether, how, and why individual education attainment depends on the educational attainment of schoolmates. Specifically, using longitudinal data on students and their friends during the school years in a nationally representative set of US schools, we consider the impact of different types of peers on education outcomes. We find that there are strong and persistent peer effects in education, but peers tend to be influential in the long run only when their friendships last more than one year. This evidence is consistent with a network model where convergence of preferences and the emergence of social norms among peers require long-term interactions.
    Keywords: spatial autoregressive model, heterogeneous spillovers, 2SLS estimation, Bayesian estimation, education
    JEL: C31 D85 Z13
    Date: 2016–01
  8. By: Sara Cecchetti (Bank of Italy); Marco Rocco (Bank of Italy and European Central Bank); Laura Sigalotti (Bank of Italy)
    Abstract: The paper develops a theoretical framework to analyze the connection between the structure of banking networks and their resilience to systemic shocks. We base our analysis on the model of interbank contagion proposed by Cifuentes, Ferrucci and Shin (2005), which accounts for the impact of illiquid assets' fire sales. We develop this model along three main lines: (i) analytically proving, in a general setting, the existence of an equilibrium and the convergence of the algorithm that can be used to compute it; (ii) extending the scope of the simulations (e.g., including an assessment of the resilience of different stylized network topologies and a sensitivity analysis); (iii) generalizing the model to deal with the case where more than one illiquid asset is available on the market.
    Keywords: financial networks, contagion, liquidity, fire sales, systemic risk
    JEL: D85 C62 G21 G28
    Date: 2016–01
  9. By: Gauer, Florian
    Abstract: We analyze a model of strategic network formation prior to a Manea (2011) bargaining game: ex-ante homogeneous players form an undirected network with explicit linking costs anticipating expected equilibrium payoffs from the subsequent sequential network bargaining. Assuming patient players, we provide a complete characterization of networks being pairwise (Nash) stable on a cost interval of positive length: specific disjoint unions of separated pairs, odd circles and isolated players constitute this class. Even for all single cost levels we are able to exclude a wide range of structures from being pairwise stable, including all other equitable networks. As an important implication, this reveals the diversity of possible bargaining outcomes to be substantially narrowed down provided pairwise stability. Further, we find that for sufficiently high costs the pairwise stable and efficient networks coincide whereas this does not hold if costs are low or at an intermediate level. As a robustness check, we also study the case of time-discounting players.
    JEL: C72 C78 D85
    Date: 2015
  10. By: Günther, Michael; Hellmann, Tim
    Abstract: Increasing concerns about climate change have given rise to the formation of International Environmental Agreements (IEAs) as a possible solution to limit global pollution eff ects. In this paper, we study the stability of IEAs in a repeated game framework where we restrict to strategies which are simple and invariant to renegotiation. Our main contribution to the literature on IEAs is that we allow for heterogeneous patterns of pollution such that additional to a global eff ect of pollution there are local pollution e ffects represented by a network structure. We show that stable IEAs exist if the network structure is balanced. Too large asymmetries in the degree of local spillovers may however lead to non-existence of stable structures.
    JEL: C72 D85 Q50
    Date: 2015

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