nep-net New Economics Papers
on Network Economics
Issue of 2016‒03‒06
fourteen papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Tariff-mediated network effects with incompletely informed consumers By Muck, Johannes
  2. On the different geographic characteristics of Free Trade Agreements and Customs Unions By James Lake; Halis M. Yildiz
  3. Recent Development of Net Neutrality Conditions in Japan: Impact of Fiber Wholesale and Long-term Evolution (LTE) By Jitsuzumi, Toshiya
  4. Pluralism in the Market of Science? A citation network analysis of economic research at universities in Vienna By Florentin Gloetzl; Ernest Aigner
  5. Internationalization of European mobile telecommunication operators: institutional diversity and performance implications By Asimakopoulos, Grigorios; Hernández, Virginia; Whalley, Jason
  6. On Peer Effects: Behavioral Contagion of (Un)Ethical Behavior and the Role of Social Identity By Dimant, Eugen
  7. The role of networks in firms’ multi-characteristics competition and market-share inequality By Lapatinas, Athanasios; Garas, Antonios
  8. Clusters and collective learning networks: the case of the Competitiveness Cluster ‘Secure Communicating Solutions’ in the French Provence-Alpes-Côte d’Azur Region By Christian Longhi
  9. Proposal of benchmarking concerning cooperation networks between justice organisations By Joanna Kuczewska; Sylwia Morawska
  10. On the topologic structure of economic complex networks: Empirical evidence from large scale payment network of Estonia By Stephanie Rend\'on de la Torre; Jaan Kalda; Robert Kitt; J\"uri Engelbrecht
  11. Keys And Challenges To Close The Rural Broadband Gap. The Role Of LTE Networks In Spain By Frías, Zoraida; González-Valderrama, Carlos; Martínez, Jorge Pérez
  12. Fiber to the People: the Development of the Ultra-broadband Network in Italy. By Carlo Cambini; Michele Polo; Antonio Sassano
  13. Interconnectedness in the Interbank Market By Brunetti, Celso; Harris, Jeffrey H.; Mankad, Shawn; Michailidis, George
  14. Application of Actor-Network Theory to Network Neutrality in Korea By Shin, Dong-Hee; Kim, Hyup (Henry); Kim, Nam Cheol; Kim, So Jeong; Kim, Sungho; Kim, Guri

  1. By: Muck, Johannes
    Abstract: I explore the competitive effects of on-net/off-net differentiation in a market with two asymmetric networks by combining the literature on on-net/off-net differentiation with research on costly consumer search in an agent-based simulation model. All consumers in the market are subscribed to one of two networks, whereby, initially, clusters of subscribers to network B exist. A priori, consumers lack information on the market shares of both network and, hence, have to engage in costly fixed-sample search. With respect to the extent of search costs, I distinguish between three types of consumers: (1) fully informed consumers (FICs) have non-positive search costs and, accordingly, are always perfectly informed about networks' market shares; (2) partly informed consumers (PICs) have moderate search costs, which allow them to observe market shares within a circular sensing field; and (3) locally informed consumers (LICs) have high search costs and, hence, only observe market shares among their immediate eight neighbours. Irrespective of their type, consumers maximize their expected utility by subscribing to the network offering the lowest expected cost for a call to a random consumer. The results of a systematic variation of the key parameters of the model show that the larger network's probability to increase its market share or to corner the market is negatively affected by the fraction of PICs and LICs, whereas it is positively affected by PICs's sensing radius, the larger network's initial market share, and the number of clusters. The introduction of calling clubs reveals that the probability of calling a friend inflicts a negative effect while the size of the calling clubs has a positive effect. These findings highlight the pivotal role of the amount of information available to consumers for the distribution of market shares.
    Keywords: on-net/off-net differentiation,tariff-mediated network effects,agent-based computational economics,search costs
    JEL: C63 D83 K23 L14 L96
    Date: 2016
  2. By: James Lake (Southern Methodist University); Halis M. Yildiz (Ryerson University)
    Abstract: Casual observation reveals a striking phenomenon of Preferential Trade Agreements (PTAs): while Customs Unions (CUs) are only intra-regional, Free Trade Agreements (FTAs) are inter and intra-regional. Using a farsighted dynamic model, we endogenize the equilibrium path of PTAs among two close countries and one far country. Rising transport costs mitigate the cost of discrimination faced by the far country as a CU non-member and diminish the value of preferential access as a CU member. Thus, sufficiently large transport costs imply an FTA is the only type of PTA that can induce the far country's participation in PTA formation. Unlike CU formation, FTA formation can induce participation because FTAs provide a flexibility benefit: an FTA member can form further PTAs with non-members but a CU member must do so jointly with all existing members. Hence, in equilibrium, CUs are intra-regional while FTAs are intra- and inter-regional.
    Keywords: Free Trade Agreement, Customs Union, fl?exibility, coordination, geography, networks, farsighted
    JEL: C71 F12 F13
    Date: 2014–05
  3. By: Jitsuzumi, Toshiya
    Abstract: The Japanese broadband market was very competitive until recently owing to the interconnection rules and the significant market power (SMP) regulations on the incumbent fixed telecom giant, NTT East/West. Japan’s regulator, the Ministry of Internal Affairs and Communications (MIC), could let the market dynamism deal with the net neutrality issue without introducing any “special” rules. However, technological developments in mobile broadband have turned mobile operators into leading players in the broadband ecosystem, which is making the broadband access market increasingly oligopolistic. The fiber wholesale recently introduced by NTT East/West may accelerate this trend by realizing the virtual integration of NTT Docomo and NTT East/West. Since mobile network operators are less disciplined in Japan’s telecom framework than fixed ones are, the MIC cannot sit back and do nothing. This paper compares two of the tools the MIC may use—increasing competitive pressure in the market and controlling the behavior of dominant mobile operators—and concludes that the latter is more promising. The author recommends that the MIC begin examining the re-regulation of mobile operators and the introduction of new rules for net neutrality.
    Date: 2015
  4. By: Florentin Gloetzl (Vienna University of Economics and Business, Welthandelsplatz 1, 1020 Vienna, Austria); Ernest Aigner (Vienna University of Economics and Business, Welthandelsplatz 1, 1020 Vienna, Austria)
    Abstract: Pluralism has become a central issue not only in the public discourse but also in heterodox economics, as the focus on impact factors and rankings based on citations continues to increase. This marketization of science has been an institutional vehicle for the economic mainstream to promote its ideas. Citations thus have become a central currency in economics as a discipline. At the same time they allow to investigate patterns in the discourse. Analyzing articles published by the two major economics departments and the more interdisciplinary Department for Socioeconomics in Vienna, this paper is novel in applying both bibliometric techniques and citation network analysis on the department level. We find that (1) Articles in heterodox journals strongly reference the economic mainstream, while the mainstream does not cite heterodox journals, (2) Articles written by researchers of the Department of Socioeconomics cite more heterodox journals irrespective of whether they are published in mainstream or heterodox journals, (3) The economics departments display a citation network exhibiting a clear ‘mainstream core – heterodox periphery’ structure, as Dobusch & Kapeller (2012b) suggest the overall discourse in economics to be, while the Department of Socioeconomics could be described as a plural though not pluralistic department with many distinct modules in the network , reflecting various disciplines, topics and schools of thought.
    Date: 2015–11
  5. By: Asimakopoulos, Grigorios; Hernández, Virginia; Whalley, Jason
    Abstract: Internationalisation plays a key role in the strategy of many firms, with one of the key benefits being improved performance. Since the early 1990s, internationalisation has played a central role within the mobile telecommunications industry, giving rise to multinational enterprises operating in multiple markets. In this paper we investigate whether the internationalisation that has occurred within the European mobile telecommunications industry has resulted in the improved performance of firms. We draw on data for 97 mobile network operators operating in 35 European countries covering the period 2003 to 2012 (inclusive). We adopt a Data Envelopment Analysis (DEA) approach to explore the relationship between firm performance and the regulatory development of countries. Our findings reveal that regulatory development does impact on firm performance, as does the extent to which markets are concentrated. We also reveal how regulatory diversity impacts on the performance of firms, and discuss the implications that arise..
    Keywords: internationalisation,mobile telecommunications,Europe,DEA
    Date: 2015
  6. By: Dimant, Eugen
    Abstract: Social interactions and the resulting peer effects loom large in both economic and social contexts. This is particularly true for the spillover of (un)ethical behavior in explaining how behavior and norms spread across individual people, neighborhoods, or even cultures. Although we understand and observe the outcomes of such contagion effects, little is known about the drivers and the underlying mechanisms, especially with respect to the role of social identity with one’s peers and the (un)ethicality of behavior one is exposed to. We use a variant of a give-or-take dictator game to shed light on these aspects in a con-trolled laboratory setting. Our experiment contributes to the existing literature in two ways: first, using a novel approach of inducing social identification with one’s peers in the lab, our design allows us to analyze the spillover-effects of (un)ethical behavior under varied levels of social identification. Second, we study whether contagion of ethical behavior differs from contagion of unethical behavior. Our results suggest that a) unethical behavior is more contagious, and b) social identification with one’s peers and not the (un)ethicality of observed behavior is the main driver of behavioral contagion. Our findings are particularly important from a policy perspective both in order to foster pro-social and mitigate deviant behavior.
    Keywords: Conformity, Behavioral Contagion, Peer effects, Social Identity, Unethical Behavior
    JEL: D03 D73 D81
    Date: 2015–12–28
  7. By: Lapatinas, Athanasios; Garas, Antonios
    Abstract: We develop a location analysis spatial model of firms’ competition in multi-characteristics space, where consumers’ opinions about the firms’ products are distributed on multilayered networks. Firms do not compete on price but only on location upon the products’ multi-characteristics space, and they aim to attract the maximum number of consumers. Boundedly rational consumers have distinct ideal points/tastes over the possible available firm locations but, crucially, they are affected by the opinions of their neighbors. Our central argument is that the consolidation of a dense underlying consumers’ opinion network is the key for the firm to enlarge its market-share. Proposing a dynamic agent-based analysis on firms’ location choice we characterize multi-dimensional product differentiation competition as adaptive learning by firms’ managers and we argue that such a complex systems approach advances the analysis in alternative ways, beyond game-theoretic calculations.
    Keywords: location choice, networks, multi-characteristics space, networks; consumer behavior; decision heuristics; agent-based model;
    JEL: C63 C65 D72 L14 R39
    Date: 2016
  8. By: Christian Longhi (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Since the development of the knowledge based economies, clusters and clusters policies have been the subject of increased interest, as sources of knowledge, innovation, and competitiveness. The paper focuses on a case study drawn from the French cluster policy, the pole of competitiveness ‘Secure Communicating Solutions’ in the French Provence-Alpes-Côte d’Azur Region, based on two high tech clusters, Rousset – Gémenos and Sophia-Antipolis. The policy aims to provide the firms incentives to build network relations of heterogeneous actors to trigger innovative processes. The analysis of the collaborative R&D projects of the pole provides insights on the nature of the collective learning networks working in the clusters as well as the prevailing organizational forms resulting from the firms strategies. It show that knowledge spillovers are not simply “in the air” but very specific of the learning networks and clusters from which they belong. Clusters thus need to be analyzed jointly with networks in order to understand the processes underlying their innovation capacity
    Keywords: Collective Learning Networks,Knowledge,Innovation,Clusters,Cluster Policy,Social Network Analysis
    Date: 2015
  9. By: Joanna Kuczewska (Faculty of Economics, University of Gdansk); Sylwia Morawska (Collegium of Business Administration, Warsaw School of Economics)
    Abstract: Benchmarking is the process of investigation of the most effective solutions that produce superior performance in organisations. This concept could be successfully implemented in organisation of justice, however, in this case the main goal of benchmarking must be different. Courts do not compete with each other so they do not have to reach the competitive advantage. The main objective of benchmarking in this situation will be identification and then implementation of the best practices in justice system for improving its general organisational efficiency and cooperation network. The measure of organizational efficiency of the judiciary is to meet needs and requirements of internal and external stakeholders. Efficient organization of justice rationally employs its material goods and skilfully acquires material and human resources. It also ensures smooth interaction of all departments of the organization. The aim of the chapter is to present the benchmarking concept and possibilities of its implementation of cooperation networks between justice organisations.
    Keywords: justice, benchmarking, cooperation networks
    JEL: K10 M10
    Date: 2016–02
  10. By: Stephanie Rend\'on de la Torre; Jaan Kalda; Robert Kitt; J\"uri Engelbrecht
    Abstract: This paper presents the first topological analysis of the economic structure of an entire country based on payments data obtained from Swedbank. This data set is exclusive in its kind because around 80% of Estonia's bank transactions are done through Swedbank, hence, the economic structure of the country can be reconstructed. Scale-free networks are commonly observed in a wide array of different contexts such as nature and society. In this paper, the nodes are comprised by customers of the bank (legal entities) and the links are established by payments between these nodes. We study the scaling-free and structural properties of this network. We also describe its topology, components and behaviors. We show that this network shares typical structural characteristics known in other complex networks: degree distributions follow a power law, low clustering coefficient and low average shortest path length. We identify the key nodes of the network and perform simulations of resiliency against random and targeted attacks of the nodes with two different approaches. With this, we find that by identifying and studying the links between the nodes is possible to perform vulnerability analysis of the Estonian economy with respect to economic shocks.
    Date: 2016–02
  11. By: Frías, Zoraida; González-Valderrama, Carlos; Martínez, Jorge Pérez
    Abstract: This paper presents a techno-economic analysis to evaluate the feasibility of a Long-Term Evolution (LTE) radio access network to provide fixed wireless 30 Mbps broadband access services in the rural areas of Spain. The results are compared to those of Fiber-To-The-Home (FTTH) technology and conclude that FTTH networks could reach up to 74% households for 2020 and the proposed LTE network could expand this coverage up to 94.4% households, playing an important role to close the broadband gap with regard to one of the key targets of the Digital Agenda for Europe.
    Keywords: Rural broadband,public policies,New Generation Access Networks,Long Term Evolution,techo-economic analysis
    Date: 2015
  12. By: Carlo Cambini; Michele Polo; Antonio Sassano
    Abstract: In this paper, we firstly revise the main technological solutions for ultra-fast broadband connections and summarize the main economic literature (both theoretical and empirical) on the role of regulation to support infrastructure investment in broadband networks We then move to the core of our analysis, that is to assess the relative positioning of the Italian market today in terms of deployment and penetration of broadband access, and then analyse the main relevant policy issues involved in the current Italian plans for broadband deployment. Our goal is to propose a policy framework for fostering the deployment of the Italian ultra-fast broadband network and evaluate the Government master plan. The analysis will also give the opportunity to provide our contribution to the current debate and to suggest how industrial policies in a market-oriented perspective should be re-considered.
    Keywords: Broadband network, regulation and investment, state aids.
    JEL: L51 L52 L96
    Date: 2016
  13. By: Brunetti, Celso (Board of Governors of the Federal Reserve System (U.S.)); Harris, Jeffrey H. (American University); Mankad, Shawn (University of Maryland); Michailidis, George (University of Michigan)
    Abstract: We study the behavior of the interbank market before, during and after the 2008 financial crisis. Leveraging recent advances in network analysis, we study two network structures, a correlation network based on publicly traded bank returns, and a physical network based on interbank lending transactions. While the two networks behave similarly pre-crisis, during the crisis the correlation network shows an increase in interconnectedness while the physical network highlights a marked decrease in interconnectedness. Moreover, these networks respond differently to monetary and macroeconomic shocks. Physical networks forecast liquidity problems while correlation networks forecast financial crises.
    Keywords: Interconnectedness; correlation network; financial crisis; interbank market; physical network
    Date: 2015–09–30
  14. By: Shin, Dong-Hee; Kim, Hyup (Henry); Kim, Nam Cheol; Kim, So Jeong; Kim, Sungho; Kim, Guri
    Abstract: This research analyzes the debate surrounding the network neutrality in Korea through the lens of Actor-Network Theory (ANT), trying to map the socio-technical network formed around the network neutrality controversy. We intend to reassemble the heterogeneous elements involved in this network and analyze its structure, identifying, describing and characterizing the different positions of the actors involved in the public debate. This paper seeks to demonstrate some of the contradictions in this process and discuss the importance of ANT concepts in the research. Our data is essentially documental, composed of laws, bills, reports and official records of public debates about the net neutrality, including video recordings of seminars and public audiences promoted by the Korean National Assembly. It can be inferred that public debate about network neutrality has been revealing acute internal contradictions between interests groups, placing actors from different levels of this network in disputes which involve a constant rearrangement of positions. The findings in this study suggest that the issue is not only complicated because it is embedded contextually, but also because the respective parties’ diverse interests are multifaceted and vague. It is concluded, therefore, that a coherent and consistent approach is an effective way to govern neutrality.
    Keywords: Network neutrality,platform neutrality,actor network theory,South Korea
    Date: 2015

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