nep-net New Economics Papers
on Network Economics
Issue of 2016‒10‒30
fourteen papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. A Marginalist Model of Network Formation By Olaizola Ortega, María Norma; Valenciano Llovera, Federico
  2. Endogenous Growth in Production Networks By Stanislao Gualdi; Antoine Mandel
  3. Endogenous Transport Networks By Edouard Schaal; Pablo Fajgelbaum
  4. Assessing the role of interbank network structure in business and financial cycle analysis By Jean-Yves Gnabo; Nicolas K. Scholtes
  5. Tail Systemic Risk And Banking Network Contagion: Evidence From the Brazilian Banking System By Miguel Rivera-Castro; Andrea Ugolini; Juan Arismendi Z
  6. Social Network Sites, Individual Social Capital and Happiness By Efstratia Arampatzi; Martijn J. Burger; Natallia A. Novik
  7. Are dyads conditionally cooperative? Evidence from a public goods experiment By Morone, Andrea; Temerario, Tiziana
  8. Altruistic and risk preference of individuals and groups By Yoshio Kamijo; Teruyuki Tamura
  9. Endogenous Network Formation in Congress By Nathan Canen; Francesco Trebbi
  10. Financial support from the family network during the crisis By Laura Bartiloro; Cristiana Rampazzi
  11. Referral networks and inequality By Manolis Galenianos
  13. Determinants of Co-Authorship in Economics: The French Case By Damien Besancenot; Kim Huynh; Francisco Serranito
  14. The Competitive Effects of Online Education By David J. Deming; Michael Lovenheim; Richard W. Patterson

  1. By: Olaizola Ortega, María Norma; Valenciano Llovera, Federico
    Abstract: We develop a network-formation model where the quality of a link depends on the amount invested in it and is determined by a link-formation "technology" , an increasing strictly concave function which is the only exogenous ingredient in the model. The revenue from the investments in links is the information that the nodes receive through the network. Two approaches are considered. First, assuming that the investments in links are made by a planner, the basic question is that of the efficient investments, either relative to a given infrastructure (i.e. a set of feasible links) or in absolute terms. It is proved that efficient networks belong to a special class of weighted nested split graph networks. Second, assuming that links are the result of investments of the node-players involved, there is the question of stability in the underlying network-formation game, be it restricted to a given infrastructure or unrestricted. Necessary and sufficient conditions for stability of the complete and star networks, and nested split graph networks in general, are obtained.
    Keywords: network, formation, efficiency, stability, nested, core, periphery, split, graphs
    JEL: A14 C72 D85
    Date: 2016–08–18
  2. By: Stanislao Gualdi (CentraleSupélec); Antoine Mandel (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We investigate the interplay between technological change and macroeconomic dynamics in an agent-based model of the formation of production networks. On the one hand, production networks form the structure that determines economic dynamics in the short run. On the other hand, their evolution reflects the long-term impacts of competition and innovation on the economy. We account for process innovation via increasing variety in the input mix and hence increasing connectivity in the network. In turn, product innovation induces a direct growth of the firm's productivity and the potential destruction of links. The interplay between both processes generate complex technological dynamics in which phases of process and product innovation successively dominate. The model reproduces a wealth of stylized facts about industrial dynamics and technological progress, in particular the persistence of heterogeneity among firms and Wright's law for the growth of productivity within a technological paradigm. We illustrate the potential of the model for the analysis of industrial policy via a preliminary set of policy experiments in which we investigate the impact on innovators' success of feed-in tariffs and of priority market access.
    Keywords: Production network,Network formation,Scale-free networks,Firms demographics,distribution of firms' size,Zipf law,general equilibrium,monopolistic competition,disequilibrium
    Date: 2016–04
  3. By: Edouard Schaal (New York University); Pablo Fajgelbaum (UCLA)
    Abstract: Abstract We develop a new theory of transport networks and study its implications for trade and growth. Given arbitrary demand and supply patterns, the model gives rise to endogenous bilateral trade costs. We first show how different spatial configurations of output and demand give rise to different types of networks. We determine conditions under which the ensuing network features spatial distributions of price gaps and employment that correspond to what is observed empirically.
    Date: 2016
  4. By: Jean-Yves Gnabo (Université de Namur); Nicolas K. Scholtes (European Central Bank & Université de Namur)
    Abstract: We develop a DSGE model incorporating a banking sector comprising 4 banks connected in a stylised network representing their interbank exposures. The micro-founded framework allows inter alia for endogenous bank defaults and bank capital requirements. In addition, we introduce a central bank who intervenes directly in the interbank market through liquidity injections. Model dynamics are driven by standard productivity as well as banking sector shocks. In our simulations, we incorporate four different interbank network structures: Complete, cyclical and two variations of the coreperiphery topology. Comparison of interbank market dynamics under the different topologies reveals a strong stabilising role played by the complete network while the remaining structures show a non-negligible shock propagation mechanism. Finally, we show that central bank interventions can counteract negative banking shocks with the effect depending again on the network structure.
    Keywords: Interbank network, DSGE model, banking, liquidity injections
    JEL: D85 E32 E44 E52 G21
    Date: 2016–10
  5. By: Miguel Rivera-Castro (ICMA Centre, Henley Business School, University of Reading); Andrea Ugolini (Dipartimento di Statistica, Informatica, Applicazioni ‘G. Parenti’, Universita di Firenze); Juan Arismendi Z (ICMA Centre, Henley Business School, University of Reading)
    Abstract: In this study the tail systemic risk of the Brazilian banking system is examined, using the conditional quantile as the risk measure. Multivariate conditional dependence between Brazilian banks is modelled with a vine copula hierarchical structure. The results demonstrate that Brazilian nancial systemic risk increased drastically during the global nancial crisis period. Our empirical ndings show that Bradesco and Itau are the origin of the larger systemic shocks from the banking system to the nancial system network. The results have implications for the capital regulation of nancial institutions and for risk managers' decisions.
    Keywords: Systemic Risk, Brazilian Banking System, Banking Network, Financial Contagion, Financial Crisis
    JEL: G01 G21 G32 G38
    Date: 2016–09
  6. By: Efstratia Arampatzi (Erasmus University Rotterdam, The Netherlands); Martijn J. Burger (Erasmus University Rotterdam, The Netherlands); Natallia A. Novik (Université de Strasbourg, France; Erasmus University Rotterdam, The Netherlands)
    Abstract: Can online social contacts replace the importance of real-life social connections in our pursuit of happiness? With the growing use of social network sites (SNSs), attention has been increasingly drawn to this topic. Our study empirically examines the effect of SNS use on happiness for different subgroups of young adults. More specifically, we examine whether the effect of SNSs on happiness is moderated by individual social capital, as measured in terms of frequency of social contacts and feelings of loneliness. Using Dutch data from the Longitudinal Internet Studies for the Social Sciences (LISS panel), we provide robust empirical evidence that there is, on average, no relationship between the amount of time spent on SNSs and happiness. However, we find a negative association between the numbers of hours spent on SNS and happiness for SNS users who feel socially disconnected and lonely. The results hold when we control for socio-demographic characteristics, trust, hours spent on other Internet sites and household income. Hence, SNSs are not a substitute for real-life social connections and, at most, complement them.
    Keywords: Subjective well-being; happiness; social network sites; individual social capital; social isolation; loneliness
    JEL: I31 L86 Z13
    Date: 2016–10–17
  7. By: Morone, Andrea; Temerario, Tiziana
    Abstract: We analysed dyads strategies in one-shot public goods game. By means of a laboratory experiment, using a variant of the strategy-method, we found that more than one third of the dyads are conditional cooperators, whereas 18% can be categorised as free riders.
    Keywords: Voluntary contributions; Conditional cooperation; Free riding; Strategy-method; Experiments;
    JEL: C91 C92 H41
    Date: 2016–10
  8. By: Yoshio Kamijo (School of Economics and Management, Kochi University of Technology); Teruyuki Tamura (School of Economics and Management, Kochi University of Technology)
    Abstract: This study examines whether attitudes toward risk and altruism are affected by being in a group or being alone. Subjects in our experiment were requested only to show their faces to other members without any further communication, differing from previous studies. In experiments of both anonymous investments and donations, we found that subjects who made decisions in a group offered significantly lower amounts than individuals who made decisions alone, even controlling for individuals' risk and altruistic preferences. Our results indicate that people are more risk averse and self-interested when they are in a group.
    Keywords: Group decision, Altruism, Decision under risk
    JEL: C91 C92 D81
    Date: 2016–10
  9. By: Nathan Canen; Francesco Trebbi
    Abstract: This paper presents and structurally estimates a model of endogenous network formation and legislative activity of career-motivated politicians. Employing data on socialization and legislative effort of members of the 105th-110th U.S. Congresses, our model reconciles a set of empirical regularities, including: recent trends in Congressional productivity; the complementarity of socialization processes and legislative activities in the House of Representatives; substantial heterogeneity across legislators in terms of effort and success rate in passing specific legislation. We avoid taking the social structure of Congress as exogenously given and instead embed it in a model of endogenous network formation useful for developing relevant counterfactuals, including some pertinent to the congressional emergency response to the 2008-09 financial crisis. Our counterfactual analysis further demonstrates how to empirically identify the specific equilibrium at play within each Congress among the multiple equilibria typically present in this class of games.
    JEL: P16 P48
    Date: 2016–10
  10. By: Laura Bartiloro (Banca d'Italia); Cristiana Rampazzi (Banca d'Italia)
    Abstract: The financial support provided by family and friends has increased during the crisis, both in frequency and amount. For the beneficiaries, the extent of the support from this informal network is similar to that of consumer credit; its distribution, however, is more limited than indebtedness with financial intermediaries. The probability of exploiting the informal network is greater when the head of the household is unemployed and increases with the difficulty of meeting monthly expenses and with the use of consumer credit because the amount of the loan granted by the intermediaries is too low to cover financial needs or to pay the instalments on the debt itself. The probability diminishes as financial wealth increases. The analysis also highlights the fact that the relief provided by the informal network is not enough to support consumption in the event of a drop in income. In this case financial wealth, the number of income earners in the household and, to a lesser extent, consumer credit all contribute to some kind of consumption smoothing.
    Keywords: Informal credit, households indebtedness, consumption smoothing
    JEL: D91 E26
    Date: 2015–09
  11. By: Manolis Galenianos (Royal Holloway, University of London)
    Abstract: I develop a theoretical model to study the welfare effects of using referrals in the labor market. In the model, firms use referrals to hire, workers are heterogeneous and the social network endogenous. Consistent with empirical evidence, referred workers are more likely to be hired, to receive a higher wage and to be more productive. The use of referrals exacerbates inequality among workers. Higher inequality is efficient if heterogeneity is driven by productivity differentials but is detrimental to efficiency if the probability of forming a match is weakly correlated with productivity, which is likely in the presence of discrimination.
    Date: 2016
  12. By: Damien Besancenot (CEPN - Centre d'Economie de l'Université Paris Nord - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique); Kim Huynh (LEM - Laboratoire d'Économie Moderne - UP2 - Université Panthéon-Assas - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche); Francisco Serranito (LEO - Laboratoire d'économie d'Orleans - CNRS - Centre National de la Recherche Scientifique - UO - Université d'Orléans, DIAL/IRD/LEDa - Développement Institutions et Mondialisation, Pôle IRD et LEDa)
    Abstract: This paper aims at estimating the determinants of co-authorship in economics. More specifically, we test the existence of a potential relationship between the research efficiency of an individual and that of his co-authors (the so called assortative matching hypothesis) using a novel database of French academic scholars. However, individual research productivity should be an endogenous regressor as the quality of an academic's publication will depend somehow on the quality of his co-authors. We have applied the Two Stage Residual Inclusion (2SRI) approach in order to take into account this endogeneity bias. The main empirical result is that the number and the quality of a researcher's co-authors reflect the productivity of that researcher.There is also a significant gender effect: being a woman has no impact on the probability of never collaborating with other economists but it decreases both the quality and the quantity of co-authors. Finally, lifetime cycles are also an important determinant of the co-authorship trend as the social imprinting hypothesis would suggest. So institutional changes occurred in French academia in mid-eighties have had a large impact on individual research productivity.
    Keywords: Co-authorship,Count Data,Zero Inflate Models,Instrumental Variables,gender productivity gap,h index
    Date: 2015
  13. By: Damien Besancenot (CEPN - Centre d'Economie de l'Université Paris Nord - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique); Kim Huynh (LEM - Laboratoire d'Économie Moderne - UP2 - Université Panthéon-Assas - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche); Francisco Serranito (LEO - Laboratoire d'économie d'Orleans - CNRS - Centre National de la Recherche Scientifique - UO - Université d'Orléans)
    Abstract: This paper aims at estimating the determinants of co-authorship in economics. More specifically, we test the existence of a potential relationship between the research efficiency of an individual and that of his co-authors using a novem database of French academics. The main empirical result is that the number and the quality of a researcher's co-authors reflect the productivity of this researcher.
    Keywords: Count Data,Poisson models,Co-authorship
    Date: 2015
  14. By: David J. Deming; Michael Lovenheim; Richard W. Patterson
    Abstract: We study the impact of online degree programs on the market for U.S. higher education. Online degree programs increase the competitiveness of local education markets by providing additional options in areas that previously only had a small number of brick-and-mortar schools. We show that local postsecondary institutions in less competitive markets experienced relative enrollment declines following a regulatory change in 2006 that increased the market entry and enrollment of online institutions. Impacts on enrollment were concentrated among private non-selective institutions, which are likely to be the closest competitors to online degree programs. We also find increases in per-student instructional spending among public institutions. Our results suggest that by increasing competitive pressure on local schools, online education can be an important driver of innovation and productivity in U.S. higher education.
    JEL: I22 I23
    Date: 2016–10

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