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on Network Economics |
| By: | Fabrizio Panebianco; Thierry Verdier; Yves Zenou |
| Abstract: | Consider a network of firms where a firm T is given the opportunity to innovate a product (first-generation innovation). If successful, this firm can temporarily sell this innovation to her direct neighbors because this will give her access to a larger market. However, if her direct neighbors innovate themselves on top of firm T's innovation (second-generation innovations), then firm T loses the right to sell her initial innovation to the remaining firms in the market. We analyze this game where each firm (T and her direct neighbors) has to decide at which price they want to sell their innovation. We show that the optimal price policy of each firm depends on the level of property rights protection, the position of firm T in the network, her degree and the size of the market. We then analyze the welfare implications of our model where the planner that maximizes total welfare has to decide which firm to target. We show that it depends on the level of property rights protection and on the network structure in a non-trivial way. JEL classification: D85, L1, Z13. Keywords: Networks, diffusion centrality, targets, innovation. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:579&r=net |
| By: | Chiu, Jonathan; Monnet, Cyril |
| Abstract: | The market for central bank reserves is mainly over-the-counter and exhibits a core-periphery network structure. This paper develops a model of relationship lending in the unsecured interbank market. In equilibrium, a tiered lending network arises endogenously as banks choose to build relationships in order to insure against liquidity shocks and to economize on the cost to trade in the interbank market. Relationships matter for banks’ bidding strategies at the central bank auction, and introduce a relationship premium that can significantly distort the observed overnight rate. For example, it can explain some anomalies in the level of interest rates – namely, the fact that banks sometimes trade above (resp. below) the central bank’s lending (resp. deposit) rate. The model also helps understand how monetary policy affects the network structure of the interbank market and its functioning, and how the market responds dynamically to an exit from the floor system. We also use the model to discuss the potential effects of bilateral exposure limit on relationship lending. |
| Keywords: | Interbank market, Relationships, Networks, Monetary policy, Corridor system, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:vuw:vuwecf:5210&r=net |
| By: | Berliant, Marcus; Watanabe, Hiroki |
| Abstract: | Zipf’s law is one of the best-known empirical regularities in urban economics. There is extensive research on the subject, where each city is treated symmetrically in terms of the cost of transactions with other cities. Recent developments in network theory facilitate the examination of an asymmetric transport network. In a scale-free network, the chance of observing extremes in network connections becomes higher than the Gaussian distribution predicts and therefore it explains the emergence of large clusters. The city-size distribution shares the same pattern. This paper decodes how accessibility of a city to other cities on the transportation network can boost its local economy and explains the city-size distribution as a result of its underlying transportation network structure. Finally, we discuss the endogenous evolution of transport networks. |
| Keywords: | Zipf’s law; city-size distribution; scale-free network |
| JEL: | L14 R12 R40 |
| Date: | 2016–07–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:72790&r=net |
| By: | Randall Jackson (Regional Research Institute, West Virginia University); Jing Chen (Regional Research Institute, West Virginia University) |
| Abstract: | The year 2015 marks the West Virginia University (WVU) Regional Research Institute’s (RRI) 50th year anniversary and this article conducts a case study to explore the scholarly collaborations by social network analysis (SNA) in the RRI research community since its inception in 1965. We have discovered that the evolving endogenous and exogenous co-authorship networks grow and gain complexity as the Institute develops and incorporates more researchers. However, this case study also uncovers and verifies several social network analysis (SNA) limitations on research pattern analysis. |
| Keywords: | Co-authorship, bibliometrics, social network analysis, Regional Research Institute |
| JEL: | R00 O18 A12 B31 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:rri:wpaper:2016wp03&r=net |
| By: | Ali Hosseiny; Mohammad Bahrami; Antonio Palestrini; Mauro Gallegati |
| Abstract: | It has been proved that network structure plays an important role in addressing a collective behaviour. In this paper we consider a network of firms and corporations and study its metastable features in an Ising based model. In our model, we observe that if in a recession the government imposes a demand shock to stimulate the network, metastable features shape its response. Actually we find that there is a minimum bound where demand shocks with a size below it are unable to trigger the market out from recession. We then investigate the impact of network characteristics on this minimum bound. We surprisingly observe that in a Watts-Strogatz network though the minimum bound depends on the average of the degrees, when translated into the economics language, such a bound is independent of the average degrees. This bound is about $0.44 \Delta$GDP, where $\Delta$GDP is the gap of GDP between recession and expansion. We examine our suggestions for the cases of the United States and the European Union in the recent recession, and compare them with the imposed stimulations. While stimulation in the US has been above our threshold, in the EU it has been far below our threshold. Beside providing a minimum bound for a successful stimulation, our study on the metastable features suggests that in the time of crisis there is a "golden time passage" in which the minimum bound for successful stimulation can be much lower. So, our study strongly suggests stimulations to be started within this time passage. |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1608.00275&r=net |
| By: | Morone, Andrea; Temerario, Tiziana |
| Abstract: | The recent literature on individual and group choices over risk has led to different results. In some studies under unanimity, groups were found to be less risk averse than individuals, while those under majority did not highlight significant differences. However, both the types of studies impose the decision rule to the group. In the present work we elicited groups’ preference under risk using a consensus rule, i.e. groups are free to solve disagreement endogenously, just as in the real life. Results from our pairwise choices experiment shows that when group members are free to use any rule they want in order to reach unanimity, there is no statistical difference between individuals’ and groups’ risk aversion. |
| Keywords: | Risk; uncertainty; decision-making; group decision; lottery; experimental economics; experiment; |
| JEL: | C92 D81 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:72747&r=net |
| By: | Raphaële Préget (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - UM3 - Université Paul-Valéry - Montpellier 3 - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique); Phu Nguyen Van (UMR Beta - CNRS - Centre National de la Recherche Scientifique); Marc Willinger (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - UM3 - Université Paul-Valéry - Montpellier 3 - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique, Université de Montpellier) |
| Abstract: | We rely on the methodology of Fischbacher et al. (2001) in order to identify subjects’ behavioral types. We then link the likelihood to act as a leader in a repeated public goods game to the elicited behavioral types. The leader in a group is defined as the subject who voluntarily decides in the first place about his contribution. The leader’s contribution is then reported publicly to the remaining group members who take their contribution decisions simultaneously. Our main findings are that leaders emerge in almost all rounds and that subjects who are identified as conditional cooperators are more likely to act as leaders than other types, e.g. free-riders or triangle-contributors. We also find that voluntary leaders, irrespective of their behavioral type, contribute always more than followers. However the presence of leadership does not prevent the decay that is commonly observed in linear public goods experiments. |
| Keywords: | Voluntary Contribution Mechanism,Leadership,Public Goods,Experimental Economics |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01300195&r=net |