nep-net New Economics Papers
on Network Economics
Issue of 2020‒03‒23
thirteen papers chosen by
Alfonso Rosa García
Universidad de Murcia

  1. Network-Based Hiring: Local Benefits; Global Costs By Arun G. Chandrasekhar; Melanie Morten; Alessandra Peter
  2. Effects of cluster policies on regional innovation networks: Evidence from France By Konan Alain N'ghauran; Corinne Autant-Bernard
  3. Assessing Contagion Risk in a Financial Network By Fernando M. Duarte; Francisco Ruela; Collin Jones
  4. Who are the economists Germany listens to? By Stephan Puehringer; Karl Beyer
  5. Active Trading and (Poor) Performance : The Social Transmission Channel By Escobar Pradilla,Laura Manuela; Pedraza Morales,Alvaro Enrique
  6. Education-Occupation Mismatch and Social Networks for Hispanics in the US: Role of Citizenship By Mundra, Kusum; Rios-Avila, Fernando
  7. Assessing the collaboration and network additionality of innovation policies: a counterfactual approach to the French cluster policy By Konan Alain N'ghauran; Corinne Autant-Bernard
  8. Profiling giants: The networks and influence of Buchanan and Tullock By Etienne Farvaque; Frédéric Gannon
  9. Bow-tie structure and community identification of global supply chain network By Abhijit Chakraborty; Yuichi Ikeda
  10. Multilayer Network Analysis of the Drug Pipeline in the Global Pharmaceutical Industry By Hiromitsu Goto; Wataru Souma; Mari Jibu; Yuichi Ikeda
  11. Group targeting under networked synergies By Mohamed Belhaj; Frédéric Deroïan
  12. The social network of the french-speaking community of Information Systems researchers By Claudio Vitari; Jean-Charles Pillet
  13. On the structure of the world economy: An absorbing Markov chain approach By Olivera Kostoska; Viktor Stojkoski; Ljupco Kocarev

  1. By: Arun G. Chandrasekhar; Melanie Morten; Alessandra Peter
    Abstract: Entrepreneurs, particularly in the developing world, often hire from their networks: friends, family, and resulting referrals. Network hiring has two benefits, documented extensively in the empirical literature: entrepreneurs know more about the ability of their network (and indeed they are often positively selected), and network members may be less likely to engage in moral hazard. We study theoretically how network hiring affects the size and composition (i.e., whether to hire friends or strangers) of the firm. Our primary result is that network hiring, while locally beneficial, can be globally inefficient. Because of the existence of a network, entrepreneurs set inefficiently low wages, firms are weakly too small, rely too much on networks for hiring, and resulting welfare losses increase in the quality of the network. Further, if entrepreneurs are uncertain about the true quality of the external labor market, the economy may become stuck in an information poverty trap where forward-looking entrepreneurs or even entrepreneurs in a market with social learning never learn the correct distribution of stranger ability, exacerbating welfare losses. We show that the poverty trap can worsen when network referrals are of higher quality.
    JEL: D83 D86 J46 L14 O1
    Date: 2020–02
  2. By: Konan Alain N'ghauran (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Corinne Autant-Bernard (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)
    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
    Date: 2020
  3. By: Fernando M. Duarte; Francisco Ruela; Collin Jones
    Abstract: Since the 2008 financial crisis, there has been an explosion of research trying to understand and quantify the default spillovers that can arise through counterparty risk. This first of two posts delves into the analysis of financial network contagion through this spillover channel. The authors introduce a framework, originally developed by Eisenberg and Noe, that is useful for thinking about default cascades.
    Keywords: financial sector; counterparty risk; default; spillovers; Networks
    JEL: G2
  4. By: Stephan Puehringer (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria); Karl Beyer (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria)
    Abstract: Building on recent work on the political and societal impact of economics and distinct economists, respectively, this chapter aims to examine individual, research and institutional characteristics as well as existing professional networks of what are considered to be “influential economists†in Germany. For the purpose of identifying the most influential economists, we make use of the popular impact ranking of the German newspaper Frankfurter Allgemeine Zeitung (FAZ) entitled “The economists, Germany listens to†(“Auf diese Ökonomen hört das Land†), which distinguishes research, media and political impact. Through biographical research and the application of social network analysis we show that most influential economists are involved in co-authorship and/or institutional networks and that there are substantial connections to different levels of public governance. We find a tremendous gender bias within the sample as well as some hints for internationalization and division of labor. Our analysis moreover indicates a much less hierarchical structure of the German-speaking economics profession when compared to the U.S. A breakdown also reveals some considerable differences between the different impact rankings. We find that while a striking majority of media and policy advice economists have connections to (inter)national public governance bodies, only a minority of research economists have. Furthermore, the ordoliberal bias, which is a crucial feature of the German economics profession, is mainly restricted to media and policy advice economists. Finally, our analysis indicates the central role of (partly also geographically organized) research hubs among influential research economists.
    Keywords: political and societal impact of economists, German economics, socio-economics, professional networks, social network analysis, biographical research, co-authorship, power in economics
    Date: 2020–03
  5. By: Escobar Pradilla,Laura Manuela; Pedraza Morales,Alvaro Enrique
    Abstract: Active investors often generate inferior returns. Social interactions might exacerbate this tendency, but the causal link between peer effects and active trading is difficult to identify empirically. This paper exploits the exogenous assignment of students to classrooms in a large-scale financial education initiative to evaluate the transmission of trading strategies among individual investors. The paper shows that students assigned to groups where classmates have more trading background, are more likely to start trading after completing the program. These social effects are stronger when peers have experienced favorable outcomes. The paper documents a negative consequence from social interactions: students that registered for courses where peer returns are large, generate lower trading profits than other investors. The evidence is consistent with social learning under biased information -- people share their most successful experiences, encouraging stock trading among uninformed investors. The results shed light on the role of selective communication in the transmission and adoption of ideas, and more importantly, in the behavior of people expose to biased information. The findings show that social learning can lead to misguided decisions when peer choices are not accurately observed by members of the social network.
    Keywords: International Trade and Trade Rules,Educational Sciences,Gender and Development,Financial Literacy,Educational Institutions&Facilities,Effective Schools and Teachers
    Date: 2019–03–07
  6. By: Mundra, Kusum (Rutgers University); Rios-Avila, Fernando (Levy Economics Institute)
    Abstract: In this paper we examine the education and occupation mismatch for Hispanics in the US using a novel objective continuous mismatch index and explore the role of immigrants' social networks on this mismatch. We explore whether having a larger social network helps Hispanics in finding jobs that better match with their skill and education levels or whether living in areas with larger concentration of Hispanics leads to more competition for the same jobs in the labor market. Given that the legal status of immigrants influence how the social networks are leveraged and their impact on labor market outcomes, we focus on the citizenship status for Hispanics. The quality of match between Hispanic's college degree major and occupation is measured using one of the continuous indices proposed in Rios-Avila and Saavedra-Caballero (2019) and calculated using pooled data for all college graduates in the US from 2010 to 2017. The Hispanic networks measures are constructed as the share of Hispanic population who are 25 years or older with respect to the total population of the same age and the second measure only includes Hispanics with at least a bachelor's degree using the weighted pooled data from 2010 to 2015. We find that networks have a positive impact on the job-match quality, but mostly for Hispanic citizens and this effect is stronger when the networks constitutes of at least a college degree. This shows that Hispanic citizens living in higher concentration of Hispanic college graduates are better able to leverage their networks or their networks are better able to match them with jobs closer to their field of specialization and skill set.
    Keywords: education-occupation mismatch, horizontal mismatch, social networks, hispanics, citizenship
    JEL: J15 J24 J61
    Date: 2020–02
  7. By: Konan Alain N'ghauran (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Corinne Autant-Bernard (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Whereas most collaboration-based innovation policies aim at fostering efficient ecosystems of innovation, evaluations of the behavioural impact of such policies remain few and far between. Relying on external-to-the-policy network data to build a counterfactual approach, this paper addresses three main evaluation issues: do cluster policies make firms more collaborative? Do they encourage local ties? Do they induce network additionality? Focusing on French data, our results suggest that cluster policies may lack effectiveness in tackling network failures.
    Keywords: Policy evaluation,Behavioural additionality,Organisational change,Counterfactual approach,Social network analysis,Cluster policy
    Date: 2020
  8. By: Etienne Farvaque (LEM - Lille économie management - LEM - UMR 9221 - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique); Frédéric Gannon (EDEHN - Equipe d'Economie Le Havre Normandie - ULH - Université Le Havre Normandie - NU - Normandie Université)
    Abstract: This paper uses network analysis to measure the positions and influences of two prominent academics, James M. Buchanan and Gordon Tullock, founders of public choice theory. First, we recount parallel accounts of their lives. Second, we provide a literature review and outline the standard centrality measures insisting on their relevance in assessing the two authors' roles in a given network. Third, we analyze their respective influences through the lens of network analysis by providing details on the publication records and, overall, co-authorship networks of the two scholars. We also explore their academic genealogy and show in particular that (i) Buchanan and Tullock's careers followed parallel paths and co-founded public choice theory and the journal of the same name, although the two had few common works; (ii) though being apparently very similar as to their centrality in the co-authoring network under scrutiny, their ego-networks were structured very differently, revealing diverse positions in the field and, thus, different influences on the discipline.
    Keywords: Buchanan,Tullock,Networks,Co-authorship,Dissertation students,Influence,Public Choice JEL Classification: A14,D85,I23
    Date: 2020–02–11
  9. By: Abhijit Chakraborty; Yuichi Ikeda
    Abstract: We study on topological properties of global supply chain network in terms of degree distribution, hierarchical structure, and degree-degree correlation in the global supply chain network. The global supply chain data is constructed by collecting various company data from the web site of Standard & Poor's Capital IQ platform in 2018. The in- and out-degree distributions are characterized by a power law with in-degree exponent = 2.42 and out-degree exponent = 2.11. The clustering coefficient decays as power law with an exponent = 0.46. The nodal degree-degree correlation indicates the absence of assortativity. The Bow-tie structure of GWCC reveals that the OUT component is the largest and it consists 41.1% of total firms. The GSCC component comprises 16.4% of total firms. We observe that the firms in the upstream or downstream sides are mostly located a few steps away from the GSCC. Furthermore, we uncover the community structure of the network and characterize them according to their location and industry classification. We observe that the largest community consists of consumer discretionary sector mainly based in the US. These firms belong to the OUT component in the bow-tie structure of the global supply chain network. Finally, we confirm the validity for propositions S1 (short path length), S2 (power-law degree distribution), S3 (high clustering coefficient), S4 ("fit-gets-richer" growth mechanism), S5 (truncation of power-law degree distribution), and S7 (community structure with overlapping boundaries) in the global supply chain network.
    Date: 2020–03
  10. By: Hiromitsu Goto; Wataru Souma; Mari Jibu; Yuichi Ikeda
    Abstract: Generally, open innovation is a lucrative research topic within industries relying on innovation, such as the pharmaceutical industry, which are also known as knowledge-intensive industries. However, the dynamics of drug pipelines within a small-medium enterprise level in the global economy remains concerning. To reveal the actual situation of pharmaceutical innovation, we investigate the feature of knowledge flows between the licensor and licensee in the drug pipeline based on a multilayer network constructed with the drug pipeline, global supply chain, and ownership data. Thus, our results demonstrate proven similarities between the knowledge flows in the drug pipeline among the supply chains, which generally agrees with the situation of pharmaceutical innovation collaborated with other industries, such as the artificial intelligence industry.
    Date: 2020–03
  11. By: Mohamed Belhaj (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Frédéric Deroïan (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: A principal targets agents organized in a network of local complementarities, in order to increase the sum of agents' effort. We consider bilateral public contracts à la Segal (1999). The paper shows that the synergies between contracting and non-contracting agents deeply impact optimal contracts: they can lead the principal to contract with a subset of the agents, and to refrain from contracting with central agents.
    Keywords: Synergies,Network,Optimal group targeting,Aggregate effort
    Date: 2019–11
  12. By: Claudio Vitari (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon); Jean-Charles Pillet (ESC Grenoble - Ecole Supérieure de Commerce de Grenoble - GEM - Grenoble Ecole de Management)
    Abstract: As the French-speaking information systems research community grows in size, the need to understand its specificities is more and more pressing. This paper sheds the light on the structure of the social network that underpins the French information systems academic society « Association Information et Management » (AIM). It draws on an analysis of the co-authorship network in the « Systèmes d'Information et Management » (SIM) outlet, and at the conference AIM. This study of the social network, a missing piece in our understanding of the specificities of the French community, addresses three questions: What is the structure of the social network of co-authors? Who are the central players? And what factors of the professional path of the researchers influence their degree of centrality in the network? The purpose of this study is to contribute to the discussion on the specificities of the French-speaking information systems research community in order to reinforce its collective identity. It is also a mean through which its actors will question their own co-authorship practices, as well as the role they have in this social network of research.
    Abstract: À mesure que la communauté de recherche française en systèmes d'information s'agrandit, le besoin d'en comprendre les spécificités se fait de plus en plus pressant. Cet article s'attache à mettre en évidence la structure du réseau social qui sous-tend la communauté de l'Association Information et Management (AIM). Elle s'appuie sur l'analyse des réseaux de co-écritures dans la revue Systèmes d'Information et Management (SIM) et les communications au colloque de l'AIM. Cette étude du réseau social, qui manquait à la compréhension des particularismes de la communauté francophone, répond à trois questions : quelle est la structure du réseau social des co-écritures ? Qui sont les acteurs centraux ? Comment le parcours professionnel des chercheurs impacte-t-il leur niveau de centralité ? L'objet de cette étude est de contribuer à la discussion sur les spécificités de la communauté française des SI en vue de renforcer son identité collective. Elle est aussi un moyen pour chacun de ses acteurs de s'interroger sur ses pratiques de co-écritures et sur son rôle dans le réseau social de recherche.
    Date: 2019
  13. By: Olivera Kostoska; Viktor Stojkoski; Ljupco Kocarev
    Abstract: The expansion of global production networks has raised many important questions about the interdependence among countries and how future changes in the world economy are likely to affect the countries' positioning in global value chains. We are approaching the structure and lengths of value chains from a completely different perspective than has been available so far. By assigning a random endogenous variable to a network linkage representing the number of intermediate sales/purchases before absorption (final use or value added), the discrete-time absorbing Markov chains proposed here shed new light on the world input/output networks. The variance of this variable can help assess the risk when shaping the chain length and optimize the level of production. Contrary to what might be expected simply on the basis of comparative advantage, the results reveal that both the input and output chains exhibit the same quasi-stationary product distribution. Put differently, the expected proportion of time spent in a state before absorption is invariant to changes of the network type. Finally, the several global metrics proposed here, including the probability distribution of global value added/final output, provide guidance for policy makers when estimating the resilience of world trading system and forecasting the macroeconomic developments.
    Date: 2020–03

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