nep-net New Economics Papers
on Network Economics
Issue of 2016‒05‒14
eight papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Two-sided heterogeneity and trade By Andrew B. Bernard; Andreas Moxnes; Karen Helene Ulltveit-Moe
  2. Open Access as a Crude Solution to a Hold-up Problem in the Two-Sided Market for Academic Journals By Mark J. McCabe; Christopher M. Snyder
  3. Network Dependence in the Euro Area Money Market By Rünstler, Gerhard
  4. Networked by design: Can policy requirements influence organisations’ networking behaviour? By Rossi, Federica; Caloffi, Annalisa; Russo, Margherita
  5. The Accounting Network: how financial institutions react to systemic crisis By Andrea Flori; Giuseppe Pappalardo; Michelangelo Puliga; Alessandro Chessa; Fabio Pammolli
  6. Network Structure and Industrial Clustering Dynamics in the Aerospace Industry By Ekaterina Turkina; Ari Van Assche; Raja Kali
  7. From Micro to Macro via Production Networks By Vasco M. Carvalho; ; ;
  8. Communication and voting in heterogeneous committees: An experimental study By Mark T. Le Quement; Isabel Marcin

  1. By: Andrew B. Bernard; Andreas Moxnes; Karen Helene Ulltveit-Moe
    Abstract: This paper develops a multi-country model of international trade that provides a simple microfoundation for buyer-seller relationships in trade. We explore a rich dataset that identifies buyers and sellers in trade and establish a set of basic facts that guide the development of the theoretical model. We use predictions of the model to examine the role of buyer heterogeneity in a market for firm-level adjustments to trade shocks, as well as to quantitatively evaluate how firms’ marginal costs depend on access to suppliers in foreign markets.
    Keywords: Heterogeneous firms; exporters; importers; sourcing costs; trade elasticity
    JEL: F4
    Date: 2016–04
  2. By: Mark J. McCabe; Christopher M. Snyder
    Abstract: The move from traditional to open-access journals—which charge no subscription fees, only submission fees—is gaining support in academia. We analyze a two-sided-market model in which journals cannot commit to subscription fees when authors (who prefer low subscription fees because this boosts readership) make submission decisions. This leads to a hold-up problem, manifested as excessive subscription fees. Open access is a crude attempt to avoid hold up by eliminating subscription fees. We compare the efficiency and profitability of traditional versus open access under various market structures (monopoly, Bertrand competition) and extensions (non-profit journals, bundling, hybrid pricing), using our theoretical findings to understand the evolution of the market for academic journals in the Internet age.
    JEL: D40 L14 L31 L82
    Date: 2016–05
  3. By: Rünstler, Gerhard
    Abstract: I estimate network dependence effects in the euro area unsecured overnight interbank market during the ?financial crisis. I use linear spatial regressions to estimate the dependence of individual banks?trading volumes (and interest rates) on the trading volumes (and interest rates) of their network neighbours. Neighbours are de?fined from past trading relations. I ?find that banks?net lending volumes and lending-borrowing interest rate spread depend negatively on their neighbours? respective outcomes. By contrast, there arise positive effects for total trading volume and borrowing rates. Overall, however, these effects are small and signi?ficant only in periods of market turmoil or of major policy interventions. The results suggest that neighbours act as a buffer in absorbing idiosyncratic liquidity shocks. JEL Classification: C21, E42
    Keywords: euro area money markets, financial crisis, network analysis, spatial regressions
    Date: 2016–03
  4. By: Rossi, Federica; Caloffi, Annalisa; Russo, Margherita
    Abstract: An important, but under-researched, question in relation to policies funding networks of innovators is: what kind of innovation networks should be supported, if the policy objective is not just to sponsor successful innovation projects, but also to encourage the participants to form networks with desirable characteristics? Focusing on a set of policy programmes implemented by the regional government of Tuscany, in Italy, between 2002 and 2008, aimed at funding networks of collaborating organisations, we investigate whether the imposition of requirements on the composition of the networks that would be eligible for funding – in particular, the demand that networks should comply with minimum size and heterogeneity thresholds – influenced the participants’ networking behaviour in the context of successive policy interventions. Our results show that these requirements immediately affected the size and composition of the project networks that applied for funding, although not always in the intended direction. However, these effects did not extend to the successive periods, when those requirements were no longer in force. This suggests that the imposition of policy requirements, per se, is unlikely to induce persistent changes in organizations’ networking behaviour. Other approaches such as implementing outreach actions in order to encourage new organisations to participate in existing innovation networks and to form new ones, and additional measures designed to foster learning opportunities for the participants, might be more effective tools to influence the networking behaviour of participating organisations.
    Keywords: Innovation networks, innovation policy, policy requirements, networking behaviour, behavioural effects of policy
    JEL: O31 R5
    Date: 2015
  5. By: Andrea Flori; Giuseppe Pappalardo; Michelangelo Puliga; Alessandro Chessa; Fabio Pammolli
    Abstract: The role of Network Theory in the study of the financial crisis has been widely spotted in the latest years. It has been shown how the network topology and the dynamics running on top of it can trigger the outbreak of large systemic crisis. Following this methodological perspective we introduce here the Accounting Network, i.e. the network we can extract through vector similarities techniques from companies' financial statements. We build the Accounting Network on a large database of worldwide banks in the period 2001-2013, covering the onset of the global financial crisis of mid-2007. After a careful data cleaning, we apply a quality check in the construction of the network, introducing a parameter (the Quality Ratio) capable of trading off the size of the sample (coverage) and the representativeness of the financial statements (accuracy). We compute several basic network statistics and check, with the Louvain community detection algorithm, for emerging communities of banks. Remarkably enough sensible regional aggregations show up with the Japanese and the US clusters dominating the community structure, although the presence of a geographically mixed community points to a gradual convergence of banks into similar supranational practices. Finally, a Principal Component Analysis procedure reveals the main economic components that influence communities' heterogeneity. Even using the most basic vector similarity hypotheses on the composition of the financial statements, the signature of the financial crisis clearly arises across the years around 2008. We finally discuss how the Accounting Networks can be improved to reflect the best practices in the financial statement analysis.
    Date: 2016–05
  6. By: Ekaterina Turkina; Ari Van Assche; Raja Kali
    Abstract: We use a new firm level dataset to study the network of formal firm linkages within and across 52 aerospace clusters in North America and Europe over the period 2002-2014. Applying community structure detection techniques, we find that the structure of the overall network has changed over time. We organize sub-networks by linkage type and find two important trends in their evolution. First, new linkages in the vertical buyer-supplier sub-network are generally formed in a hierarchical hub-and-spoke fashion, whereas new links in the horizontal partnership sub-network are generated in a more decentralized and cohesive manner. Second, the geographical scope of new linkages is different, with vertical buyer-supplier and investment linkages moving increasingly trans-local and partnership linkages becoming more localized. Taken together, our findings suggest that the overall network is evolving from a geographically partitioned community structure to a hierarchical community structure that is stratified along value chain stages.
    Keywords: industrial clusters, local and trans-local linkages, community structure detection, small world analysis,
    JEL: L14 L62 F23
    Date: 2016–04–08
  7. By: Vasco M. Carvalho; ; ;
    Abstract: A modern economy is an intricately linked web of specialized production units, each relying on the flow of inputs from their suppliers to produce their own output which, in turn, is routed towards other downstream units. In this essay, I argue that this network perpective on production linkages can offer novel insights on the sources of aggregate fluctuations. To do this, I show (i) how production networks can be mapped to a standard general equilibrium setup; (ii) how to approach input-output from this networked perspective and (iii) how theory and data on production networks can be usefully combined to shed light on comovement and aggregate fluctuations.
    Keywords: Production Networks; Comovement; Business Cycles; Input-Output Linkages.
    Date: 2014–10–17
  8. By: Mark T. Le Quement (University of Bonn); Isabel Marcin (Max Planck Institute for Research on Collective Goods)
    Abstract: We study experimentally the effectiveness of communication in common value committees exhibiting publicly known heterogeneous biases. We test models assuming respectively self-interested and strategic-, joint payoff-maximizing- and cognitively heterogeneous agents. These predict varying degrees of strategic communication. We use a 2 x 2 design varying the information protocol (communication vs exogenous public signals) and the group composition (heterogeneous vs homogeneous). Results are only consistent with the third model. Roughly 80% of (heuristic) subjects truth-tell and vote with the majority of announced signals. Remaining (sophisticated) agents lie strategically and approximately apply their optimal decision rule.
    Keywords: Committees, Voting, Information Aggregation, Cheap Talk, Experiment
    JEL: C92 D72 D82 D83
    Date: 2016–03

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