nep-net New Economics Papers
on Network Economics
Issue of 2021‒09‒06
four papers chosen by
Alfonso Rosa García
Universidad de Murcia

  1. Evolution of cooperative networks. By Pandey, Siddhi Gyan
  2. Know-how and Know-who: Effects of a Randomized Training on Network Changes Among Small Urban Entrepreneurs By Mattea Stein
  3. MULTIPLE PUBLIC GOODS IN NETWORKS. By Kundu, Rajendra P.; Pandey, Siddhigyan
  4. Social optimality and stability of matchings in peer-to-peer ridesharing By Paolo Delle Site; André de Palma; Samarth Ghoslya

  1. By: Pandey, Siddhi Gyan (Jindal School of Liberal Arts and Humanities, O.P. Jindal Global University)
    Abstract: Situations that require individuals to mutually cooperate are often analysed as coordination games. This paper proposes a model of cooperative network formation where the network is formed through the process of the coordination game being played between multiple agents. Additionally, network effects are modelled in by the fact that the benefit to any agent from a mutually cooperative link is enhanced, over a base value, by a factor of her trustworthiness or reputation as observed by her partner in that link. Within this framework, evolution of cooperative networks is analysed in the presence of altruistic agents, through repeated interaction between myopically best responding agents in a finite population. Properties of networks that sustain as Nash equilibrium are also analysed.
    Keywords: coordination game ; network formation ; game theory ; social networks
    Date: 2021–08
  2. By: Mattea Stein (Università di Napoli Federico II and CSEF)
    Abstract: Micro-enterprise owners in developing country industrial clusters interact through networks of horizontal business collaboration, information-sharing, and friendship links, despite the potential for close competition inherent in this setting. This paper explores how such business links change, and specifically whether they can be endogenous to a public policy intervention that provides training to some network members but not others. Using a randomized training for micro-entrepreneurs in Kampala, Uganda, together with novel panel network data, I find a positive effect on linking likelihoods, driven by untreated entrepreneurs to whom links with treated entrepreneurs become more desirable. As predicted by a bilateral network formation framework, it is the relatively lower-status treated who attract new connections with relatively higher-status untreated. Furthermore, links within clusters of treated enterprises are strengthened, which is not due to a strategic replacement of untreated with treated partners out of a competition motive but seems to be an effect of jointly attending the training. Together, my findings show that public policy interventions can cause networks to re-wire, with important implications both for research and policy.
    Keywords: network formation, network change, social networks, firms, micro-enterprises
    Date: 2021–09–02
  3. By: Kundu, Rajendra P. (Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University); Pandey, Siddhigyan (Jindal School of Liberal Arts and Humanities, O.P. Jindal Global University)
    Abstract: In this paper we consider an n-player simultaneous move game on a fixed network, in which each player chooses her investment level in each of m goods that are non-rivalrous and non-excludable across links in the network. We analyze the existence, stability and welfare properties of PSNEs of the game. Our results demonstrate that while every game necessarily has a specialized equilibrium, the stability of equilibrium profiles and the existence of specialized equilibria in which specialization is dispersed depend crucially on the network structure. We also provide some interesting welfare implications relating to concentration of specialization.
    Date: 2021–08
  4. By: Paolo Delle Site; André de Palma; Samarth Ghoslya (CY Cergy Paris Université, THEMA)
    Abstract: Peer-to-peer ridesharing, where drivers are also travellers, can alleviate congestion and emissions that plague cities by increasing vehicle occupancy. We propose a socially optimal ridesharing scheme, where a social planner matches passengers and drivers in a way that minimizes travel costs (travel time and fuel) plus environmental costs. The contribution helps in computing the socially optimal ridesharing schemes for networks of any topology within a static framework of route choice with exogenously fixed travel times. A linear programming problem is formulated to compute the optimal matchings. Existence, integrality and uniqueness properties are investigated. The social planner receives a payment from passengers and rewards drivers for the higher costs they bear. Passengers and drivers never incur a loss because travelling alone remains always an option, but matchings may need to be subsidised. The socially optimal matching solution without environmental costs is proved to satisfy the stability property according to which no pair of passenger and driver prefers each other to any of the current partners. In the Sioux Falls network, when 20% of individuals are willing to rideshare, with 80% of passengers travelling by car and 20% by public transport, 17.37% optimally do so, resulting in a 7.05% decrease in CO2 emissions on the all-travel-alone scenario.
    Keywords: environment, matching stability, optimization, ridesharing, socially optimal matching
    JEL: C78 R40 R48
    Date: 2021

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