nep-net New Economics Papers
on Network Economics
Issue of 2020‒02‒24
fourteen papers chosen by
Alfonso Rosa García
Universidad de Murcia

  1. Peer Networks and Entrepreneurship: A Pan-African RCT By Vega-Redondo, Fernando; Pin, Paolo; Ubfal, Diego; Benedetti-Fasil, Cristiana; Brummitt, Charles; Rubera, Gaia; Hovy, Dirk; Fornaciari, Tommaso
  2. Technology Contagion in Networks By Come Billard
  3. Ethnic Networks and the Employment of Asylum Seekers: Evidence from Germany By Stips, Felix; Kis-Katos, Krisztina
  4. Effects of cluster policies on regional innovation networks: Evidence from France By Konan Alain N’Ghauran; Corinne Autant-Bernard
  5. Efficient Incentives in Social Networks: Gamification and the Coase Theorem By Daske, Thomas
  6. Stable and Efficient Structures in Multigroup Network Formation By Shadi Mohagheghi; Jingying Ma; Francesco Bullo
  7. A Spatial Model of Bank Branches in Canada By Heng Chen; Matthew Strathearn
  8. Social networks, role models, peer effects, and aspirations By Mani Anandi; Riley Emma
  9. Competition in Network Industries: Evidence from the Rwandan Mobile Phone Network By Daniel Bjorkegren
  10. Anti-conformism in the Threshold Model of Collective Behavior By Michel Grabisch; Fen Li
  11. Understanding Regional Branching Knowledge Diversification via Inventor Collaboration Networks By Adam Whittle; Balázs Lengyel; Dieter F. Kogler
  12. Financial Linkages and Sectoral Business Cycle Synchronization: Evidence from Europe By Hannes Boehm; Julia Schaumburg; Lena Tonzer
  13. Social embeddedness in stakeholder networks and legislators' policy preferences: The case of German livestock policy By Grunenberg, Michael; Henning, Christian H. C. A.
  14. Refugees and Foreign Direct Investment: Quasi-Experimental Evidence from U.S. Resettlements By Mayda, Anna Maria; Parsons, Christopher; Pham, Han; Vézina, Pierre-Louis

  1. By: Vega-Redondo, Fernando (Universidad de Alicante); Pin, Paolo (Bocconi University); Ubfal, Diego (Bocconi University); Benedetti-Fasil, Cristiana (European University Institute); Brummitt, Charles (Harvard University); Rubera, Gaia (Bocconi University); Hovy, Dirk (Bocconi University); Fornaciari, Tommaso (Bocconi University)
    Abstract: Can large-scale peer interaction foster entrepreneurship and innovation? We conducted an RCT involving almost 5,000 entrepreneurs from 49 African countries. All were enrolled in an online business course, and the treatment involved random assignment to either face-to-face or virtual (Internet-mediated) interaction. We find positive treatment effects on both the submission of business plans and their quality, provided interaction displays some intermediate diversity. Network effects are also significant on both outcomes, although diversity plays a different role for each. This shows that effective peer interaction can be feasibly implemented quite broadly but must also be designed carefully, in view of the pursued objectives.
    Keywords: social networks, peer effects, entrepreneurship, innovation, semantic analysis
    JEL: C93 D04 D85 O12 O31 O35
    Date: 2019–12
  2. By: Come Billard (University of Paris-Dauphine, France.)
    Abstract: We represent a social system as a network of agents and model the process of technology diffusion as a contagion propagating in such a network. By setting the necessary conditions for an agent to switch (ie. to adopt the technology), we address the question of how to maximize the contagion of a technology subject to a Moore’s law (eg. solar modules) in a network of agents. We focus the analysis on the effects of the network structure and technological learning on diffusion. To this end, we study three classes of networks, namely lattice, small-world and random networks. Our numerical results show that both the lattice and the small-world networks facilitate the contagion. These networks exhibit high levels of clustering, and additional contacts increase the probability of contagion through social reinforcement. Conversely, networks exhibiting short path length and a low level of clustering (ie. random networks) guarantee an equivalent speed of diffusion with smaller ranges (ie. variance) in terms of aggregate adoption. Whatever the structure, learning effects are critical for contagion to spread in agents networks.
    Keywords: networks, complex contagion, technology, Moore’s law, cascades
    Date: 2020–01
  3. By: Stips, Felix (University of Göttingen); Kis-Katos, Krisztina (University of Goettingen)
    Abstract: Using novel registry data on the population of asylum seekers in Germany for the period from 2010 to 2016, and quasi-experimental variation induced by German allocation policies, we identify causal effects of the size and composition of local co-national networks on formal labor market access of asylum seekers. While the individual employment probability is not linked to network size, it increases with the number of employed local co-national asylum seekers and decreases with the number of non-employed network members, thereby underlining the central importance of network quality.
    Keywords: social networks, refugees, employment, Germany, dispersal policies
    JEL: F22 J61 R23
    Date: 2020–01
  4. By: Konan Alain N’Ghauran (Univ Lyon, UJM Saint-Etienne, CNRS, GATE L-SE UMR 5824, F-42023 Saint-Etienne, France); Corinne Autant-Bernard (Univ Lyon, UJM Saint-Etienne, CNRS, GATE L-SE UMR 5824, F-42023 Saint-Etienne, France)
    Abstract: Despite the growing body of literature evaluating cluster policies, it still remains difficult to establish conclusively their structural effects on regional innovation networks. Focusing on the French cluster policy during the period 2005-2010, this study aims at evaluating how cluster policies influence the structure of local innovation networks following network topologies that may be beneficial for regional innovation. Based on a panel data of four periods and 94 NUTS3 French regions, we estimate spatial Durbin models, allowing us to identify direct, indirect and total effects of cluster policies. The results suggest that cluster policies can result in both positive and negative total effects on the structure of local innovation networks depending on regions’ technological specialisation. Beyond the heterogeneous effects, the results also highlight that cluster policies may lead to a regional competition for the strengthening of innovation networks. This finding echoed previous research pointing out the possible "beggar-thy-neighbour" effects of cluster policies.
    Keywords: Cluster, Regional innovation, Innovation network, Policy evaluation
    JEL: L52 O33 R58
    Date: 2020
  5. By: Daske, Thomas
    Abstract: This study explores mechanism design for networks of interpersonal relationships. Agents' social (more or less altruistic or spiteful) preferences and private payoffs are all subject to asymmetric information; utility is quasi-linear. Remarkably, the asymmetry of information about agents' social preferences can be operationalized to satisfy agents' participation constraints. The main result is a constructive proof of the Coase theorem, in its typical mechanism-design interpretation, for networks of at least three agents: If endowments are sufficiently large, any such network can resolve any given allocation problem with a budget-balanced mechanism that is Bayesian incentive-compatible, interim individually rational, and ex-post Pareto-efficient. The endogenously derived solution concept is interpreted as gamification: Resolve the agents' allocation problem with an efficient social-preference robust mechanism; attract agents' participation by complementing this mechanism with a budget-balanced game that operates on their social preferences and provides them with a platform to live out their propensities to cooperate or compete.
    Keywords: mechanism design,social preferences,gamification,Coase theorem
    JEL: C72 C78 D62 D82
    Date: 2020
  6. By: Shadi Mohagheghi; Jingying Ma; Francesco Bullo
    Abstract: In this work we present a strategic network formation model predicting the emergence of multigroup structures. Individuals decide to form or remove links based on the benefits and costs those connections carry; we focus on bilateral consent for link formation. An exogenous system specifies the frequency of coordination issues arising among the groups. We are interested in structures that arise to resolve coordination issues and, specifically, structures in which groups are linked through bridging, redundant, and co-membership interconnections. We characterize the conditions under which certain structures are stable and study their efficiency as well as the convergence of formation dynamics.
    Date: 2020–01
  7. By: Heng Chen; Matthew Strathearn
    Abstract: This research aims to empirically analyze the spatial distribution of bank-branch networks in Canada. We study the market structure (both industrial and geographic concentrations) within the networks’ own or adjacent postal areas. Our empirical framework considers branch density (the ratio of the total number of branches to the area size) by employing a spatial two-way fixed-effects model. Our main finding is that there are no effects associated with market structure; however, there are strong spatial socioeconomic effects from the networks' own and nearby areas. In addition, we also study the effect of spatial competition from rival banks: we find that large banks and small banks tend to avoid markets dominated by their competitors.
    Keywords: Firm dynamics; Market structure and pricing
    JEL: L1 R3
    Date: 2020–01
  8. By: Mani Anandi; Riley Emma
    Abstract: We review the literature on pathways through which social networks may influence social mobility in developing countries.We find that social networks support members in tangible waysâ۠via access to opportunities for migration, credit, trading relationships, information on jobs, and new technologiesâ۠as well as in intangible ways, such as shaping their beliefs, hopes, and aspirations, through role models and peers. Nevertheless, networks can disadvantage non-members, typically the poor and marginalized.Recent evidence suggests a range of policy tools that could help mitigate disadvantages faced by excluded groups: temporary incentives to encourage experimentation into new regions, occupations, or technologies, and role modelsâ۠real and virtualâ۠to mitigate psychosocial challenges faced by marginalized groups.Targeting large fractions of marginalized groups simultaneously could increase the effectiveness of such policies by leveraging the influence of existing social networks.
    Keywords: geographic labour mobility,Social networks,Migration,Behavioral economics,cultural economics,human resources
    Date: 2019
  9. By: Daniel Bjorkegren
    Abstract: This paper develops a method to analyze the effects of competition policy in a network industry. Competition has mixed effects on incentives to invest: when a network is split between competitors, each captures only a fraction of potential network effects. However, a firm may invest in components that are not shared, to attract customers to its network. I structurally estimate the utility of adopting a mobile phone from its subsequent usage, using transaction data from nearly the entire Rwandan network over 4.5 years. I simulate the equilibrium choices of consumers and network operators, and consider Rwanda’s decision to delay the introduction of competition. I show that there is a policy under which adding a competitor earlier would have reduced prices and increased incentives to invest in rural towers, increasing welfare by the equivalent of 1% of GDP. I analyze the effects of setting different interconnection rates, and reducing switching costs through number portability.
    Date: 2020
  10. By: Michel Grabisch (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Fen Li (Department of Entomology - Michigan State University [East Lansing] - Michigan State University System)
    Abstract: We provide a detailed study of the threshold model, where both conformist and anti-conformist agents coexist. Our study bears essentially on the convergence of the opinion dynamics in the society of agents, i.e., finding absorbing classes, cycles, etc. Also, we are interested in the existence of cascade effects, as this may constitute a undesirable phenomenon in collective behavior. We divide our study into two parts. In the first one, we basically study the threshold model supposing a fixed complete network, where every one is connected to every one, like in the seminal work of Granovetter. We study the case of a uniform distribution of the threshold, of a Gaussian distribution, and finally give a result for arbitrary distributions, supposing there is one type of anti-conformist. In a second part, we suppose that the neighborhood of an agent is random, drawn at each time step from a distribution. We distinguish the case where the degree (number of links) of an agent is fixed, and where there is an arbitrary degree distribution. We show the existence of cascades and that for most societies, the opinion converges to a chaotic situation.
    Keywords: threshold model,anti-conformism,absorbing class,opinion dynamics
    Date: 2019
  11. By: Adam Whittle; Balázs Lengyel; Dieter F. Kogler
    Abstract: The diversification of regions into new technologies is driven by the degree of relatedness to existing capabilities in the region. However, in such case where the necessary skills for diversification are missing, the importation of external knowledge from neighbouring regions or from further away is necessary. Despite the importance of interregional knowledge flows through collaborative work, we still have a very limited understanding of how collaboration networks across regions facilitate diversification processes. The present study investigates the diversification patterns of European NUTS2 regions into new knowledge domains via CPC technology classes reported in patent applications to the European Patent Office. The findings indicate that externally oriented inventor collaboration networks increase the likelihood that a new technology enters a region. The influence of interregional ties is higher if the external knowledge sourcing is based on a diverse set of regions and if collaboration is intense within entities located in distinct regions. Further, the results demonstrate that interregional collaboration networks in general provides the final push into related diversification activities. At the same time, internal collaboration promotes entry into knowledge domains that are weakly related to already present technologies in the region. Finally, evidence shows that diverse external connections and intense collaboration within companies across distant sites compensate for missing related skills in the region.
    Keywords: Economic Diversification, Regional Knowledge Networks, Inventor Collaboration Networks, Firm Linkages, Knowledge Sourcing, Specialisation, Patent Data Analysis
    JEL: O33 O52 R11
    Date: 2020–02
  12. By: Hannes Boehm (Halle Institute for Economic Research); Julia Schaumburg (Vrije Universiteit Amsterdam); Lena Tonzer (Halle Institute for Economic Research)
    Abstract: We analyze whether financial integration between countries leads to converging or diverging business cycles using a dynamic spatial model. Our model allows for contemporaneous spillovers of shocks to GDP growth between countries that are financially integrated and delivers a scalar measure of the spillover intensity at each point in time. For a financial network of ten European countries from 1996-2017, we find that the spillover effects are positive on average but much larger during periods of financial stress, pointing towards stronger business cycle synchronization. Dismantling GDP growth into value added growth of ten major industries, we observe that some sectors are strongly affected by positive spillovers (wholesale & retail trade, industrial production), others only to a weaker degree (agriculture, construction, finance), while more nationally influenced industries show no evidence for significant spillover effects (public administration, arts & entertainment, real estate).
    Keywords: Financial Integration, Business Cycle Synchronization, Industry Dynamics, Spatial Model
    JEL: E32 F44 G10
    Date: 2020–02–04
  13. By: Grunenberg, Michael; Henning, Christian H. C. A.
    Abstract: In a world of increasing complexity, politicians have only limited information about the relationship of policies and the outcomes. They often make use of simplified heuristics, i.e. policy beliefs. Hence, an influence opportunity for interest groups occurs: informational lobbying. It complements classic lobbying strategies, e.g. vote buying or campaign spending. Providing expert knowledge allows interest groups to influence legislators towards the preferred policy position. Aside from so-called "approved votes", German parliamentarians generally follow parliamentary group's discipline. Thus, experts' role within parliamentary groups is crucial. They deal with key issues and represent the parliamentary group in the committees. Furthermore, they work out the group's positions on these specific issues. They are the starting point for interest groups to disseminate their information and hence influence the legislators' positions. An exemplary field of complexity is the agricultural sector. In particular, livestock production is challenged by questions of sustainability, i.e. public expectations towards animal welfare, producers and consumers' welfare as well as ecological consequences. Importance of animal welfare is demonstrated by the ongoing debate about piglet castration or husbandry system standards. This raises two questions: First, to what extend are stakeholders able to gain direct access to politicians? Second, how can they use this structure to influence policy decisions? Using a social network approach, we first investigate the structure of three networks: exchange of expert knowledge, political support and informal social ties. In particular, we put emphasis on the connection between parliamentary actors and other stakeholders from society, i.e. interest groups. This refers to the first question. Second, we apply a model of political exchange using information and lobbying networks. Following Henning et al. (2019), this model not only includes political exchange, but also belief updating. Moreover, it considers direct as well as indirect ties. This analysis step serves to answer the second question.
    Date: 2019
  14. By: Mayda, Anna Maria (Georgetown University); Parsons, Christopher (University of Western Australia); Pham, Han (University of Western Australia); Vézina, Pierre-Louis (King's College London)
    Abstract: We exploit the designs of two separate U.S. refugee dispersal policies to provide causal evidence that refugees foster outward FDI to their countries of origin. Drawing upon aggregated individual-level refugee and project-level FDI data, we first leverage the quasi-random distribution of refugees "without U.S. ties" after the enactment of the 1980 Refugee Act, to show that outward FDI to refugees' countries of origin grew more from those U.S. commuting zones that hosted greater numbers of refugees after 1990. Secondly, we exploit the specificities of the Indochina Migration and Refugee Assistance Act, which resulted in a quasi-experimental dispersal of Vietnamese refugees in 1975, to provide causal evidence that Vietnamese refugees fostered FDI to their home region, while national domestic reforms in Vietnam amplified the positive FDI-creating effects of the overseas Vietnamese diaspora. Overall, our results highlight a new mechanism through which refugees foster development to their origin countries.
    Keywords: refugees, networks, foreign direct investment
    JEL: F21 F22 F23
    Date: 2019–12

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