nep-net New Economics Papers
on Network Economics
Issue of 2016‒05‒28
six papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. The Role of Goods-Trade Networks for Services-Trade Volume By Daniel Rais
  2. Adoption with Social Learning and Network Externalities By Marcel Fafchamps; Mans Soderbom; Monique vanden Boogaart
  3. Eurozone network connectedness during calm and crisis: evidence from the MTS platform for interdealer trading of European sovereign debt By Li, Youwei; Waterworth, James
  4. Competition for the access to and use of information in networks By Philipp Möhlmeier; Agnieszka Rusinowska; Emily Tanimura
  5. Keeping up with the e-Joneses: Do Online Social Networks Raise Social Comparisons? By Sabatini, Fabio; Sarracino, Francesco
  6. Determining influential models By Michel Grabisch; Agnieszka Rusinowska

  1. By: Daniel Rais
    Abstract: Abstract In this paper, we address the role of countries’ goods-trade networks for their services-trade volume. The paper employs a large cross section of bilateral trade data on aggregate cross-border goods and services sales and illustrates that the depth and overlap of two countries’ services networks induce a positive direct impact on their services-trade volume. The evidence takes into account that goods trade flows and networks are potentially endogenous so that the estimated direct effects support a causal interpretation. We find that the magnitude of the multilateral goods-trade network effect on the bilateral services-trade volume is much larger than that of bilateral goods-trade volume.
    Date: 2015–11–08
  2. By: Marcel Fafchamps; Mans Soderbom; Monique vanden Boogaart
    Abstract: Using a large administrate dataset covering the universe of phone calls and airtime transfers in a country over a four year period, we examine the pattern of adoption of airtime transfers over time. We start by documenting strong network effects: increased usage of the new airtime transfer service by social neighbors predicts a higher adoption probability. We then seek to narrow down the possible sources of these network effects by distinguishing between network externalities and social learning. Within social learning, we also seek to differentiate between learning about existence of the new product from learning about its quality or usefulness. We find robust evidence suggestive of social learning both for the existence and the quality of the product. In contrast, we find that network effects turn negative after first adoption, suggesting that airtime transfers are strategic substitutes among network neighbors.
    JEL: D12 D83 O33
    Date: 2016–05
  3. By: Li, Youwei; Waterworth, James
    Abstract: This paper examines the connectedness of the Eurozone sovereign debt market over the period 2005–2011. By employing measures built from the variance decompositions of approximating models we are able to define weighted, directed networks that enable a deeper understanding of the relationships between the Eurozone countries. We find that connectedness in the Eurozone was very high during the calm market conditions preceding the global financial crisis but decreased dramatically when the crisis took hold, and worsened as the Eurozone sovereign debt crisis emerged. The drop in connectedness was especially prevalent in the case of the peripheral countries with some of the most peripheral countries deteriorating into isolation. Our results have implications for both market participants and regulators.
    Keywords: European sovereign debt; MTS; Network; Connectedness; Return; Volatility
    JEL: G01 G15 H63
    Date: 2016–05–10
  4. By: Philipp Möhlmeier (BiGSEM - University Bielefeld); Agnieszka Rusinowska (Centre d'Economie de la Sorbonne - Paris School of Economics); Emily Tanimura (Centre d'Economie de la Sorbonne)
    Abstract: In a network formation framework, where payoffs reflect an agent's ability to access information from direct and indirect contacts, we integrate negative externalities due to connectivity associated with two types of effects: competition for the access to information, and rivalrous use of information. We consider two separate models to capture the first and the second situations, respectively. In the first model, we assume that information is a non-rivalrous good but that there is competition for the access to information, for example because an agent with many contacts must share his time between them and thus has fewer opportunities to pass on information to each particular contact. The main idea is that the probability that each neighbor receives the information decreases with the number of contacts the sender has. In the second model, we assume that there is not competition for the access to information but that the use of information is rivalrous. In this case, it is assumed that when people receive the information before me, the harmful effect is greater than when others receive the information at the same time as myself. Our results concern pairwise stability and efficiency in both models and allow us to compare and contrast the effects of two kinds of competition for information
    Keywords: network formation; connections model; information; negative externalities; pairwise stability; efficiency
    JEL: D85 C70
    Date: 2016–04
  5. By: Sabatini, Fabio; Sarracino, Francesco
    Abstract: Online social networks, such as Facebook, disclose an unprecedented volume of personal information amplifying the occasions for social comparisons, which can be a cause of frustration. We test the hypothesis that the use of social networking sites (SNS) increases social comparisons as proxied by people’s dissatisfaction with their income and we compare the effect of SNS in Western and Eastern European countries. After controlling for the possibility of reverse causality, our results suggest that SNS users have a higher probability to compare their achievements with those of others. In Western countries, this leads individuals to a lower satisfaction with their economic conditions. The opposite holds in Eastern countries, where upward comparisons seemingly strengthen the hope that an improvement in individuals’ economic conditions will occur (so called “tunnel effect”). We conclude that SNS can be a strong engine of frustration for their users depending on the institutional and economic circumstances.
    Keywords: Social Networks, Social Networking Sites, Social Comparisons, Satisfaction with Income, Relative Deprivation, Research Methods/ Statistical Methods, D83, I31, O33, Z1, Z13,
    Date: 2016–04–30
  6. By: Michel Grabisch (Centre d'Economie de la Sorbonne - Paris School of Economics); Agnieszka Rusinowska (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: We consider a model of opinion formation based on aggregation functions. Each player modifies his opinon by arbitrarily aggregating the current opinion of all players. A player is influential for another player if the opinion of the first one matters for the latter. A generalization of influential player to a coalition whose opinion matters for a player is called influential coalition. Influential players (coalitions) can be graphically represented by the graph (hypergraph) of influence, and the convergence analysis is based on properties of the hypergraphs of influence. In the paper, we focus on the practical issues of applicability of the model w.r.t. the standard opinion formation framework driven by the Markov chain theory. For the qualitative analysis of convergence, knowing the aggregation functions of the players is not required, but one only needs to know the influential coalitions for every player. We propose simple algorithms that permit to fully determine the influential coalitions. We distinguish three cases: the symmetric decomposable model, the anonymous model, and the general model
    Keywords: social network; opinion formation; aggregation function; influential coalition; algorithm
    JEL: C7 D7 D85
    Date: 2016–04

This nep-net issue is ©2016 by Yi-Nung Yang. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.