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on Network Economics |
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Issue of 2017‒05‒07
four papers chosen by Pedro CL Souza Pontifícia Universidade Católica do Rio de Janeiro |
| By: | Matt V. Leduc; Matthew O. Jackson; Ramesh Johari |
| Abstract: | When a new product or technology is introduced, potential consumers can learn its quality by trying the product, at a risk, or by letting others try it and free-riding on the information that they generate. We propose a dynamic game to study the adoption of technologies of uncertain value, when agents are connected by a network and a monopolist seller chooses a policy to maximize profits. Consumers with low degree (few friends) have incentives to adopt early, while consumers with high degree have incentives to free ride. The seller can induce high-degree consumers to adopt early by offering referral incentives - rewards to early adopters whose friends buy in the second period. Referral incentives thus lead to a `double-threshold strategy' by which low and high-degree agents adopt the product early while middle-degree agents wait. We show that referral incentives are optimal on certain networks while inter-temporal price discrimination (i.e., a first-period price discount) is optimal on others, and discuss welfare implications. |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1509.06544&r=net |
| By: | Hahn, Youjin (Monash University); Islam, Asadul (Monash University); Patacchini, Eleonora (Cornell University); Zenou, Yves (Monash University) |
| Abstract: | We randomly assign more than 6,000 students from 150 primary schools in Bangladesh to work on math assignments in one of three settings: individually, in groups with random schoolmates, or in groups with friends. The groups consist of four people and are balanced by average cognitive ability and ability distribution. While the achievement of male students is not affected by the group assignment, low-ability females assigned to groups outperform low-ability females working individually. The treatment is particularly effective when low-ability females study with friends. To rule out sorting effects, we show that random groups with identical compositions to those of friendship groups do not produce similar effects. Our study thus documents that placing students into study groups with their friends may improve learning, especially for low-ability females. |
| Keywords: | social interactions, education, gender, learning, friendship |
| JEL: | I25 J16 O12 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10674&r=net |
| By: | Antoine Bonleu (Aix-Marseille Univ. (Aix-Marseille School of Economics), CNRS, EHESS and Centrale Marseille) |
| Abstract: | The aim of this paper is to explain over-regulation and local social capital as barriers to immigration. The interest of social networks is that conflict resolution is independent of the law. Hence, if local individuals develop local social capital and regulation, foreigners without social networks are disadvantaged and can less easily migrate. We develop a two-country search-theoretic model where we endogenize the choice of procedural formalism (PF) and the network size. This model features two different equilibria: a Mediterranean equilibrium with PF and dense local social network and a Scandinavian and Anglo-Saxon equilibrium without PF and local social networks. |
| Keywords: | housing market regulation, local social capital, mobility, climate amenities, social networks |
| JEL: | R38 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:1714&r=net |
| By: | Grillitsch, Markus (CIRCLE, Lund University); Nilsson, Magnus (CIRCLE, Lund University) |
| Abstract: | Knowledge externalities affect high and low growth firms differently. The paper develops two theoretical arguments. The knowledge equilibrium argument postulates that knowledge externalities weaken high growth firms for the benefit of low growth firms until performance differences vanish. The knowledge competition argument claims that high growth firms are in a better position to identify, attract, and integrate knowledge, thereby benefiting more from knowledge externalities than low growth firms. Based on 188,936 observations of 32,736 Swedish firms from 2004 to 2011, it is analyzed whether knowledge centers enable high growth firms to surge ahead or low growth firms to catch up. |
| Keywords: | knowledge spillovers; externalities; firm growth; competitiveness; core-periphery |
| JEL: | O18 O30 P48 R10 R12 |
| Date: | 2017–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2017_006&r=net |