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on Network Economics |
| By: | Noémie NAVARRO; Fabio CASTIGLIONESI |
| Abstract: | We study the optimality and the (decentralized) formation of an interbank network. Banks can offer higher expected returns to depositors by establishing connections in the network. However, banks have an incentive to gamble with depositors\' money if not sufficiently capitalized. The bankruptcy of a bank negatively affects the banks connected to it (counterparty risk). We show that both the efficient network and the decentralized one are characterized by a core-periphery structure. Nevertheless, when bank capital transfers are not possible, the two network structures coincide only if counterparty risk is sufficiently low. Otherwise, the decentralized network is under-connected as compared to the optimal one. Finally, we show that bank capital transfers do not avoid the formation of inefficient networks. |
| Keywords: | Interbank Network, Core-periphery, Liquidity Coinsurance, Counterparty Risk |
| JEL: | D85 G21 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:grt:wpegrt:2016-13&r=net |
| By: | Bryan S. Graham (Institute for Fiscal Studies and University of California, Berkeley) |
| Abstract: | In social and economic networks linked agents often share additional links in common. There are two competing explanations for this phenomenon. First, agents may have a structural taste for transitive links – the returns to linking may be higher if two agents share links in common. Second, agents may assortatively match on unobserved attributes, a process called homophily. I study parameter identifiability in a simple model of dynamic network formation with both effects. Agents form, maintain, and sever links over time in order to maximize utility. The return to linking may be higher if agents share friends in common. A pair-specific utility component allows for arbitrary homophily on time-invariant agent attributes. I derive conditions under which it is possible to detect the presence of a taste for transitivity in the presence of assortative matching on unobservables. I leave the joint distribution of the initial network and the pair-specific utility component, a very high dimensional object, unrestricted. The analysis is of the 'fixed effects' type. The identification result is constructive, suggesting an analog estimator, whose single large network properties I characterize. |
| Keywords: | Strategic Network Formation, Homophily, Transitivity, Triads, Assortative Matching, Initial Conditions Problem, Panel Data, Fixed Effects |
| JEL: | C31 C33 C35 |
| Date: | 2016–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:cemmap:16/16&r=net |
| By: | Andrew B. Bernard; Andreas Moxnes; Yukiko U. Saito |
| Abstract: | This paper examines the importance of buyer-supplier relationships, geography and the structure of the production network in firm performance. We develop a simple model where firms can outsource tasks and search for suppliers in different locations. Low search and outsourcing costs lead firms to search more and find better suppliers. This in turn drives down the firm's marginal production costs. We test the theory by exploiting the opening of a high-speed (Shinkansen) train line in Japan which lowered the cost of passenger travel but left shipping costs unchanged. Using an exhaustive dataset on firms' buyer-seller linkages, we find significant improvements in firm performance as well as creation of new buyer-seller links, consistent with the model. |
| Keywords: | production networks, trade, productivity, infrastructure |
| JEL: | F14 D22 D85 L10 L14 R12 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1435&r=net |
| By: | Rivera, Thomas J |
| Abstract: | This paper analyzes the incentives that arise within an organization when communication is restricted to a particular network structure (e.g., a hierarchy). We show that restricting communication between the principal and agents may create incentives for the agents to misbehave when transmitting information and tasks throughout the organization. To remedy this issue, we provide necessary and sufficient conditions on the topology of the network of communication such that restricting communication to a particular network does not restrict the set of outcomes that the principal could otherwise achieve. We show that for any underlying incentives and any outcome available when communication is unrestricted, there exists a communication scheme restricted to a particular network that implements this outcome (i.e., does not induce agents to misbehave in the communication phase) if and only if that network satisfies our conditions. |
| Keywords: | Communication; Incentives; Principal Agent; Information Transmission; Communication Networks; Organizational Behaviour; Correlated Equilibrium; Communication Equilibrium; Secure Communication |
| JEL: | C72 D83 |
| Date: | 2015–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:1141&r=net |
| By: | OECD |
| Abstract: | The digital convergence anticipated during the 2008 Seoul Ministerial has become a reality. Historically, communication services were delivered via single-purpose dedicated networks (e.g. telephone, television). Many OECD countries now function with converged networks, facilitated by the Internet Protocol (IP) in which “bits” are the building blocks for transmission of all content and service – all “applications.” This process of convergence is steadily deepening as technology evolves and more and more activity shifts online. In particular, technological, service and business innovations both at the core and at the edge of the network are significantly affecting competitors, investors and consumers. This report identifies trends in convergence, the opportunities and challenges arising from these changes and suggests policies to meet them. |
| Date: | 2016–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaab:251-en&r=net |
| By: | Gerhards, Leonie (Department of Economics, University of Hamburg); Gravert, Christina (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | Various empirical papers have shown that peers affect productivity and behavior in the workplace. However, the mechanisms through which peers influence each other are still largely unknown. In this laboratory experiment we study a situation in which individuals might look at their peers' behavior to motivate themselves to endure in a task that requires perseverance. We test the impact of unidirectional peer effects under individual monetary incentives, controlling for ability and tactics. We find that peers significantly increase their observers' perseverance, while knowing about being observed does not significantly affect behavior. In a second experiment we investigate the motives to self-select into the role of an observing or an observant subject and what kind of peers individuals deliberately choose. Our findings provide first insights on the perception of peer situations by individuals and new empirical evidence on how peer groups emerge. |
| Keywords: | grit; perseverance; laboratory experiment; peer effects; real effort |
| JEL: | C91 D03 J24 M50 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0659&r=net |
| By: | Henze, B. (Tilburg University, School of Economics and Management) |
| Abstract: | The main objective of this thesis is to use economic laboratory experiments in order to evaluate the performance of regulatory schemes and market designs in addressing challenges encountered in the regulation of European network industries. Chapter 2 assesses whether regulatory holidays and Long Term Financial Transportation Rights (LTFTR) can provide a network operator with incentives for optimal network expansion. However, in the studied environment which captures essential features of gas transportation networks, neither of the two schemes generates improvements over a baseline of price cap regulation. Chapter 3 investigates whether auctions can be used to successfully implement two-part tariff Incremental Surplus Subsidy (ISS) schemes under aggregate demand uncertainty. Depending on the method used for determining the network users’ individual contributions to the subsidy, multi-unit Vickrey auctions yield promising results. Chapter 4 finally studies the effects of providing varying degrees of transparency in a duopolistic market for experience goods. Under full transparency, the two sellers are found not to maximally differentiate the quality of their products as theory would predict but to rather engage in fierce price competition at high quality levels. Moreover, even intermediate levels of transparency result in significantly higher consumer surplus and total welfare when compared to a situation without any transparency |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:b18fcfca-2b95-4b01-91e2-049839e9817b&r=net |
| By: | Markussen, Simen (Ragnar Frisch Centre for Economic Research); Røed, Knut (Ragnar Frisch Centre for Economic Research) |
| Abstract: | In virtually all industrialized countries, women are underrepresented in entrepreneurship, and the gender gap exhibits a remarkable persistence. We examine one particular source of persistence, namely the prevalence of gendered networks and associated peer effects. We study how early career entrepreneurship is affected by existing entrepreneurship among neighbors, family members, and recent schoolmates. Based on an instrumental variables strategy, we identify strong peer effects. While men are more influenced by other men, women are more influenced by other women. We estimate that differences between male and female peer groups explain approximately half of the gender gap in early career entrepreneurship. |
| Keywords: | early career entrepreneurship, peer effects, gender gap, instrumental variables |
| JEL: | L26 M13 J16 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9984&r=net |
| By: | OECD |
| Abstract: | This paper provides new evidence on the development of online platforms and explores the emergence of new forms of work in the digital economy. Following the rise of platforms that match demand and supply of goods (e-commerce) and information (search, social networks), platform markets for services traded over the Internet (the "x"-economy) have grown exponentially in recent years. The paper analyses how online platforms affect the organisation of markets and work; discusses related opportunities and challenges for individuals participating in such markets; presents analysis of trends and effects of non-standard work in OECD countries; and identifies policy issues related to new forms of work. It finds that the transformative effects of online platforms may challenge existing institutions and might necessitate reviews of policy and regulatory frameworks in many areas. To further analyse such digital transformation, better data is needed on the effects of online platforms in all of these areas. |
| Date: | 2016–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaab:260-en&r=net |
| By: | Marco Battaglini (Department of Economics, Cornell University and EIEF); Ernest K. Lair (Department of Economics, Lehigh University); Wooyoung Lim (Department of Economics, The Hong Kong University of Science and Technology); Joseph Tao-yi Wang (Department of Economics, National Taiwan University) |
| Abstract: | We experimentally investigate the informational theory of legislative committees first proposed by Gilligan and Krehbiel [1987, 1989]. Two committees provide policy-relevant information to a legislature under two different procedural rules. Under the open rule, the legislature is free to make any decision; under the closed rule, the legislature is constrained to choose between a committee¡¦s proposal and an exogenous status quo. Our experiment shows that even in the presence of conflicts of interests, legislative committees help improve the legislature¡¦s decision by providing useful information. We further obtain evidence in support of three theoretical predictions: the Outlier Principle, according to which more extreme preferences of the committees reduce the extent of information transmission; the Distributional Principle, according to which the open rule is more distributionally efficient than the closed rule; and the Restrictive-rule Principle, according to which the closed rule better facilitates the informational role of legislative committees. We, however, obtain mixed evidence for the Heterogeneity Principle, according to which more information can be extracted in the presence of multiple committees with heterogeneous preferences. Our experimental findings provide overall support for the equilibrium predictions of Gilligan and Krehbiel [1989], some of which have been controversial in the literature. |
| Keywords: | Legislative Committees; Strategic Information Transmission; Laboratory Experiment |
| JEL: | C72 D82 D83 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:ntw:wpaper:1601&r=net |
| By: | Dorota Celińska (Faculty of Economic Sciences, University of Warsaw) |
| Abstract: | In this article we investigate which characteristics of the developers involved in the creation of Open Source software favor innovation in the Open Source community. We utilize a unique database, obtained by web-scrapping GitHub from January to March, 2016. The results of the analysis show that higher reputation in the community improves up to a certain degree the probability of gaining collaborators, but developers are also driven by reciprocity, which is consistent with the concept of gift economy. There exists also a statistically significant network effect emerging from the standarization -- developers using the most popular programming languages in the service are likely to have more collaborators. Providing additional contact information improves the chance of having coworkers. The obtained results can be generalized for the population of mature users of GitHub. |
| Keywords: | Open Source, GitHub, fork, collaboration, innovations, reputation, gift economy, network externality, standarization, reciprocity |
| JEL: | L15 L86 L17 L14 D85 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2016-15&r=net |
| By: | Burton, Michael; Jennings, Sarah; Fragnol, Ludovic; Marre, Jean-Baptiste; Paredes, Samantha; Pascoe, Sean; Rogers, Abbie; Yamazaki, Satoshi |
| Keywords: | Environmental Economics and Policy, |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare16:235814&r=net |