nep-net New Economics Papers
on Network Economics
Issue of 2017‒07‒30
five papers chosen by
Pedro CL Souza
Pontifícia Universidade Católica do Rio de Janeiro

  1. Measuring Social Connectedness By Michael Bailey; Ruiqing (Rachel) Cao; Theresa Kuchler; Johannes Stroebel; Arlene Wong
  2. Conformism, Social Norms and the Dynamics of Assimilation By Olcina, Gonzalo; Panebianco, Fabrizio; Zenou, Yves
  3. Firm-to-firm Trade in Sticky Production Networks By Kevin Lim
  4. On Efficient Information Aggregation Networks By Antonio Jiménez-Martínez
  5. Speeding up the internet: Regulation and investment in European fiber optic infrastructure By Briglauer, Wolfgang; Cambini, Carlo; Grajek, Michał

  1. By: Michael Bailey; Ruiqing (Rachel) Cao; Theresa Kuchler; Johannes Stroebel; Arlene Wong
    Abstract: We introduce a new measure of social connectedness between U.S. county-pairs, as well as between U.S. counties and foreign countries. Our measure, which we call the "Social Connectedness Index" (SCI), is based on the number of friendship links on Facebook, the world's largest online social networking service. Within the U.S., social connectedness is strongly decreasing in geographic distance between counties: for the population of the average county, 62.8% of friends live within 100 miles. The populations of counties with more geographically dispersed social networks are generally richer, more educated, and have a higher life expectancy. Region-pairs that are more socially connected have higher trade flows, even after controlling for geographic distance and the similarity of regions along other economic and demographic measures. Higher social connectedness is also associated with more cross-county migration and patent citations. Social connectedness between U.S. counties and foreign countries is correlated with past migration patterns, with social connectedness decaying in the time since the primary migration wave from that country. Trade with foreign countries is also strongly related to social connectedness. These results suggest that the SCI captures an important role of social networks in facilitating both economic and social interactions. Our findings also highlight the potential for the SCI to mitigate the measurement challenges that pervade empirical research on the role of social interactions across the social sciences.
    JEL: D1 E0 F1 I1 J6 O3
    Date: 2017–07
  2. By: Olcina, Gonzalo; Panebianco, Fabrizio; Zenou, Yves
    Abstract: We consider a model where each individual (or ethnic minority) is embedded in a network of relationships and decides whether or not she wants to be assimilated to the majority norm. Each individual wants her behavior to agree with her personal ideal action or norm but also wants her behavior to be as close as possible to the average assimilation behavior of her peers. We show that there is always convergence to a steady-state and characterize it. We also show that different assimilation norms may emerge in steady state depending on the structure of the network. We then consider an optimal tax/subsidy policy which aim is to reach a certain level of assimilation in the population. We believe that our model sheds light on how the pressure from peers, communities and families affect the long-run assimilation decisions of ethnic minorities.
    Keywords: Assimilation; networks; peer pressure.; Social norms
    JEL: D83 D85 J15 Z13
    Date: 2017–07
  3. By: Kevin Lim (Dartmouth College)
    Abstract: This paper develops a structural model of trade between heterogeneous firms in which the network of firm-level input-output linkages is determined both dynamically and endogenously. Firms vary in the size of their customer and supplier bases, occupy heterogeneous positions in different supply chains, and adjust their sets of trade partners over time. Despite the rich heterogeneity and dynamics, the model remains computationally tractable. Using both cross-sectional and panel data on trading relationships between US firms, I estimate the model's key parameters via a simulated method of moments technique and assess its fit to the data. Simulations of the model are then used to study how the structure and dynamics of the production network matter for the propagation of firm-level supply and demand shocks and their translation into aggregate effects.
    Date: 2017
  4. By: Antonio Jiménez-Martínez (Division of Economics, CIDE)
    Abstract: This paper considers a population of agents that are connected through a network that allows them to aggregate locally their pieces of private information about some uncertain (exogenous) parameter of interest. The agents wish to match their actions to the true value of the parameter and to the actions of the other agents. I ask how the design of (interim) efficient (minimally connected) networks depends on the level of complementarity in the agents’ actions. When the level of complementarity is either low or high, efficient networks are characterized by a high number of different neighborhoods and, as a consequence, by low levels of connectivity. For intermediate levels of complementarity in actions, efficient networks tend to feature low numbers of highly connected neighborhoods. The implications of this paper are relevant in security environments where agents are naturally interpreted as analysts who try to forecast the value of a parameter that describes a potential threat to security.
    Keywords: Networks, information aggregation, beauty-contests, strategic complementarity, efficiency
    JEL: C72 D83 D84 D85
    Date: 2016–10
  5. By: Briglauer, Wolfgang; Cambini, Carlo; Grajek, Michał
    Abstract: In this paper we study how the coexistence of access regulations for legacy (copper)and fiber networks shapes the incentives to invest in network infrastructure. To this end, we develop a theoretical model explaining investment incentives by incumbent telecom operators and heterogeneous entrants and test its main predictions using panel data from 27 EU member states over the last decade. Our theoretical model extends the existing literature by, among other things, allowing for heterogeneous entrants in internet access markets, as we consider both other telecom and cable TV operators as entrants. In the empirical part, we use a novel data set including information on physical fiber network investments, legacy network access regulation and recently imposed fiber access regulations. Our main finding is that more stringent access regulations for both the legacy and the fiber networks harm investments by incumbent telecom operators, but, in line with our theoretical model, do not affect cable TV operators.
    Keywords: Internet access market,Access regulation,Investment,Infrastructure,Next Generation Networks,Broadband,Telecoms,Cable operators and Europe
    JEL: L96 L51
    Date: 2017

This nep-net issue is ©2017 by Pedro CL Souza. 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.