nep-net New Economics Papers
on Network Economics
Issue of 2016‒04‒30
fourteen papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Dynamic Competition with Network Externalities: Why History Matters By Halaburda, Hanna; Jullien, Bruno; Yehezkel, Yaron
  2. How Do Airlines React to Airport Congestion? The Role of Networks By Fageda, Xavier, 1975-; Flores-Fillol, Ricardo
  3. Tell Me How to Rule: Leadership, Delegation, and Voice in Cooperation By Marco Faillo; Federico Fornasari; Luigi Mittone
  4. Financial Frictions in Production Networks By Saki Bigio; Jennifer La’O
  5. Social network effects on mobile money adoption in Uganda By Murendo, Conrad; Wollni, Meike; de Brauw, Alan; Mugabi, Nicholas
  6. How to Catch a Unicorn. Case Studies By Jean Paul Simon
  7. Where Do Social Preferences Come From? By Chaning Jang; John Lynham
  8. On regional innovator networks as hubs for innovative ventures By Uwe Cantner; Tina Wolf
  9. Understanding the Knowledge and Social Networks in India- Case study of Bihar By Mittal, Surabhi; S.P., Subash; Ajay, Anurag; Kumar, Anurag
  10. Elasticity and Discipline in the Global Swap Network By Perry Mehrling
  11. Financial Networks, Bank Efficiency and Risk-Taking By Thiago Christiano Silva; Solange Maria Guerra; Benjamin Miranda Tabak; Rodrigo Cesar de Castro Miranda
  12. Incentive Compatible Advertising on a Social Network By Eliaz, Kfir; Spiegler, Ran
  13. Adoption of Land Management Practices in Ethiopia: Which Network Types By Mequaninte, Teferi; Birner, Regina; Mueller, Ulrike
  14. Information Networks among Women and Men and the Demand for an Agricultural Technology in India By Magnan, Nicholas; Spielman, David J.; Gulati, Kajal; Lybbert, Travis

  1. By: Halaburda, Hanna; Jullien, Bruno; Yehezkel, Yaron
    Abstract: We consider dynamic competition among platforms in a market with network exter- nalities. A platform that dominated the market in the previous period becomes \focal" in the current period, in that agents play the equilibrium in which they adopt the focal platform whenever such equilibrium exists. Yet when faced with higher-quality competition, can a low-quality platform remain focal? In the finite-horizon case, the unique equilibrium is efficient for \patient" platforms; with an infinite time horizon, however, there are multiple equilibria where either the lowor high-quality platform dominates. If qualities are stochastic, the platform with a better average quality wins with a higher probability, even when its realized quality is lower, and this probability increases as platforms become more patient. Hence social welfare may decline as platforms become more forward looking.
    Keywords: network externalities, dynamic competition, coordination
    JEL: L1
    Date: 2016–03
  2. By: Fageda, Xavier, 1975-; Flores-Fillol, Ricardo
    Abstract: In this paper, we investigate the relationship between airline network structure and airport congestion. More specifically, we study the ways in which airlines adjust frequencies to delays (as a measure of airport congestion) depending on the network type they operate. Our results suggest that network structure has a fundamental impact. Thus, while airlines operating fully-connected configurations reduce frequencies in response to more frequent delays, airlines operating hub-and-spoke structures increase frequencies. Therefore, network airlines have incentives to keep frequencies high even if this is at the expense of a greater congestion at their hub airports. This result sheds light on previously unclear results in the literature. Keywords: airline networks; airport congestion; delays. JEL Classification Numbers: L13; L93; R41.
    Keywords: Aeroports, Aviació comercial, Oligopolis, Transport, 338 - Situació econòmica. Política econòmica. Gestió, control i planificació de l'economia. Producció. Serveis. Turisme. Preus,
    Date: 2015
  3. By: Marco Faillo; Federico Fornasari; Luigi Mittone
    Abstract: Following some recent studies, we experimentally test the effect of intra-group leadership in a public good experiment. Specifically, individuals taking part in our experiment are randomly assigned either the role of leader or the role of follower. Leaders take part in a public good game, aware of the fact that every decision they make directly affects their followers. In this sense, our experimental setting combines the dimension of leadership in cooperation with the one of delegated agents. In our experiment, we find that leadership produces two main effects: subjects contribute more, and tend to punish more frequently. In spite of the presence of higher contributions, we observe lower payoffs; these are caused by an aggressive behavior that push leaders to mane an undue use of punishment. Allowing one-sided communication between followers and leaders provide a different effect: communication reduces decision makers’ aggressiveness, leading to lower contributions and punishment, but better results in terms of final payoffs. The same welfare can be reached when leadership is not implemented at all; this suggests that the presence of a dictatorial leader in public goods with punishment can be beneficial only when there is communication.
    Keywords: Voluntary contribution experiment, Leadership, Punishment
    JEL: C72 C92 H41 O12
    Date: 2016
  4. By: Saki Bigio (UCLA and NBER); Jennifer La’O (Columbia University and NBER)
    Abstract: We study how an economy’s production structure determines the response of aggregate output and employment to sectoral financial shocks. In our framework, economic production is organized in an input-output network in which firms face financial constraints on their working capital. We show how sectoral financial shocks propagate through the network and manifest at the aggregate level through two channels: a fall in total factor productivity and an aggregate labor wedge distortion. The strength of each channel depends on the overall network architecture and the location of shocks. Finally, we calibrate our model to the U.S. input-output tables and use it to quantitatively assess the role of the network multiplier within the context of the recent Financial Crisis and the Great Recession.
    Keywords: Production Networks, Financial Frictions, Business Cycles
    JEL: C67 G10 E42
    Date: 2016–04
  5. By: Murendo, Conrad; Wollni, Meike; de Brauw, Alan; Mugabi, Nicholas
    Abstract: Social networks play a vital role in generating social learning and information exchange that can drive the diffusion of new financial innovations. This is particularly relevant for developing countries where education, extension and financial information services are underprovided. This article identifies the effect of social networks on the adoption of mobile money by households in Uganda. Using data from a household survey, conditional logistic regression is estimated controlling for correlated effects and other information sources. Results show that mobile money adoption is positively influenced by the size of social network members exchanging information, and the effect is more pronounced for non-poor households. The structure of social network however has no effect. The findings show that information exchange through social networks is crucial for adoption of mobile money. Mobile money adoption is likely to be enhanced if promotion programs reach more social networks.
    Keywords: social networks, mobile money, adoption, Uganda, Consumer/Household Economics, Research and Development/Tech Change/Emerging Technologies, D14, D85, O33, Q12,
    Date: 2015
  6. By: Jean Paul Simon
    Abstract: Technology companies with high market capitalisation (often called unicorns) have been receiving a lot of attention and media coverage recently. In general, unicorns are IT-centric (software mostly, but also hardware). They are often rather young global companies that match unsatisfied demand with supply through the production (which can easily be scaled up) of innovative and usually affordable services and products. These are usually part of the mobile internet wave, and rely on connectivity (high speed networks, mobile and fixed), new devices (smartphones, tablets, phablets…) and the opportunities these bring. They are grounded in network effects, and demand-side economies of scale and scope. They depend on a strong favourable business environment, developing organically and building on fast expanding markets (emerging economies, middle classes). They are Venture Capital-dependent and the competition for funding can generate impressive (i.e. inflated) valuations. These companies can be disruptive for other sectors and firms. This report aims to document the phenomenon by investigating a qualitative sample of 30 companies that have recently been valued above the one billion dollar threshold. It identifies some of their characteristics and the lessons to be learnt. The report has two parts: Part I contains the overall findings of the investigation and some suggestions for policy makers. Part II contains a detailed account of the case studies on which the investigation is based. They are published as separate documents
    Keywords: IT industry, technology, innovation, market capitalisation
    JEL: L00 L1 L2 L8 O3
    Date: 2016–04
  7. By: Chaning Jang (Department of Psychology, Princeton University); John Lynham (Department of Economics & UHERO, University of Hawaii at Manoa; Center for Ocean Solutions, Stanford University)
    Abstract: Where do preferences for fairness come from? We use a unique field setting to test for a spillover of sharing norms from the workplace to a laboratory experiment. Fishermen working in teams receive random income shocks (catching fish) that they must regularly divide among themselves. We demonstrate a clear correlation between sharing norms in the field and sharing norms in the lab. Furthermore, the spillover effect is stronger for fishermen who have been exposed to a sharing norm for longer, suggesting that our findings are not driven by selection effects. Our results are consistent with the hypothesis that work environments shape social preferences.
    Keywords: ultimatum game; social preferences; fairness; workplace spillovers
    JEL: Q2 C9 C7 B4 D1
    Date: 2015–08
  8. By: Uwe Cantner (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Tina Wolf (University of Southern Denmark, Odense)
    Abstract: At least since Schumpeter published his work 'The Theory of Economic Development' (1912), a wide body of literature has focused on the evolutionary process behind firm growth and survival. Recently a growing interest is devoted to the variable 'location' as a critical factor, shaping firm performance. However, less attention has been paid to the region-specific characteristics that may play a relevant role in determining the growth and survival of a firm. Some works see university-based knowledge spillovers as one such factor (Audretsch and Lehmann 2005, Cassia et al. 2009). This paper extends this approach to the regional innovator network, promoting region-specific knowledge spillovers. Two data bases are applied. First, patent data delivers the innovator network for Thuringia. The second data base contains firm specific information on innovative ventures founded in Thuringia in the period between 1990 and 2006. The results show that the firm's individual probability to be innovative and connected to the innovator network positively influences the chances of this firm to survive.
    Keywords: Innovation, Entrepreneurship, Networks, Inventor, Patents, Survival
    JEL: L26 D85 P25 O31
    Date: 2016–04–15
  9. By: Mittal, Surabhi; S.P., Subash; Ajay, Anurag; Kumar, Anurag
    Abstract: Knowledge networks and social networks are the drivers of information sharing and they play an important role in diffusion of technology and related knowledge. In this study the key informants in a village setup are studies to understand the farmer’s network with an objective to understand the existing social, knowledge systems and their structure, characteristics and relationships between different actors. The purpose is to use these channels as means to disseminate technologies and related information. We use the network map analysis as a tool to demonstrate the linkages between the key actors. Attributes captured in the study are information flows between different actors, the type of information, timeliness and frequency of information and mode of communication. The study is undertaken in 6 districts covering 20 villages of Bihar where 111 key informants were interviewed and this is supplemented with survey of 1000 households. The paper uses a mixed approach of quantitative and qualitative analysis.
    Keywords: Farmers networks, Social networks, Information and communication, Bihar, Technology dissemination, Labor and Human Capital, Research and Development/Tech Change/Emerging Technologies, L15, Q16,
    Date: 2015
  10. By: Perry Mehrling (Barnard College)
    Abstract: This paper sketches the outlines of the new international monetary system that has emerged in the aftermath of the global financial crisis. At the center of the system, a network of central bank swaps between the six major central banks serves as an elastic backstop for private foreign exchange operations. Farther out on the periphery, a further network of central bank swaps operates to economize on scarce reserves of the major currencies. Meanwhile, in the private foreign exchange market, basis swaps are emerging as the central location where liquidity is explicitly priced, inside the bounds set by central bank swaps.
    JEL: E58 F33 G15
    Date: 2015–11
  11. By: Thiago Christiano Silva; Solange Maria Guerra; Benjamin Miranda Tabak; Rodrigo Cesar de Castro Miranda
    Abstract: Networks with a core-periphery topology are found in many financial systems across different jurisdictions. Though the theoretical and structural aspects of core-periphery networks are clear, the consequences that core-periphery structures bring for banking efficiency stand as an open question. We address this gap in the literature by providing insights as to how the structure of financial networks can affect bank efficiency. We find that core-periphery structures are cost efficient for banks, which is a characteristic that encourages the participation of banks in financial networks. On the downside, we also show that core-periphery structures are risk-taking inefficient, because they imply higher systemic risk levels in the financial system. In this way, regulators should be aware of the excessive risk inefficiency that arises in the financial system due to individual decisions made by banks in the network
    Date: 2016–04
  12. By: Eliaz, Kfir; Spiegler, Ran
    Abstract: A platform that operates a social network allows firms to post display ads to network members. Each member is interested in exactly one type of product. The network structure is correlated with the profile of member's privately known preferences over product types. The platform's policy consists of a display rule (which specifies the stationary probability with which each product is shown to each network member, as a function of the network structure) and an advertising fee (which the platform charges from firms as a function of their reported type). We provide conditions for the existence of an incentive-compatible policy that maximizes and fully extracts firms' surplus. This objective is easier to attain when the network is more informative of members' preferences, consumers are more attentive to advertising and their frequency of repeated purchases is higher, and advertisers are less informed of the network structure. We provide a more detailed characterization when the network is generated according to the "stochastic block model", thus linking our model to the "community detection" problem in Network Science.
    Date: 2016–04
  13. By: Mequaninte, Teferi; Birner, Regina; Mueller, Ulrike
    Abstract: In recent years researchers have begun to discuss the impact of social networks on the adoption of land management practices. However, key research questions about both the types of social networks and how specific networks influence adoption are not sufficiently addressed. Using World Bank’s data, we fill this research gap by exploring the impacts of three types of social networks (relatives, friendship and neighborhood) on the adoption of soil conservation and tree-planting in the context of Ethiopia. The results show that networks with relatives have a positive impact on tree-planting but its impact on soil conservation is negative. This indicates the presence of “egoistic behavior” even in stronger ties such as relatives. Hence, our conclusion is that farmers tend to plant trees as a means of securing land holdings. However, such “private benefit” incentives may disappear when it comes to soil conservation, which is more of a “social benefit”.
    Keywords: International Development, Land Economics/Use,
    Date: 2015
  14. By: Magnan, Nicholas; Spielman, David J.; Gulati, Kajal; Lybbert, Travis
    Abstract: Although there is ample evidence of differences in how and where men and women acquire information, most research on learning household decision-making only considers access to information for a single, typically male, household head. This assumption is problematic in developing-country agriculture, where women play a fundamental role in farming. Using gender-disaggregated social network data from Uttar Pradesh, India, we analyze agricultural information networks among men and women.We test for gender-specific network effects on demand for laser land leveling—a resource-conserving technology—using data from a field experiment that combines a BDM auction with a lottery. We find that factors determining male and female links are similar, although there is little overlap between male and female networks. We also find evidence of female network effects on household technology demand, although male network effects are clearly stronger. Results indicate that extension services can better leverage female networks to promote new technologies.
    Keywords: Social network analysis, peer effects, technology adoption, learning externalities, India, Agricultural and Food Policy, Research and Development/Tech Change/Emerging Technologies, D80, Q12, Q16,
    Date: 2015

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