nep-net New Economics Papers
on Network Economics
Issue of 2021‒09‒27
eight papers chosen by
Alfonso Rosa García
Universidad de Murcia

  1. Perceived Competition in Networks By Olivier Bochet; Mathieu Faure; Yan Long; Yves Zenou
  2. Network structure and governance in sport clusters: a mixed methods analysis By Anna Gerke; Geoff Dickson; Hagen Wäsche
  3. Dynamic effects of network exposure on equity markets By Kangogo, Moses; Volkov, Vladimir
  4. Network Games, Peer Effect and Neutral Transfers By Dike Chukwudi Henry
  5. What Feeds on What? Networks of Interdependencies between Culture and Institutions By Nadia von Jacobi; Vito Amendolagine
  6. Uniqueness of Clearing Payment Matrices in Financial Networks By Csóka, Péter; Herings, P. Jean-Jacques
  7. Caste, Courts and Business By Chakraborty, Tanika; Mukherjee, Anirban; Saha, Sarani; Shukla, Divya
  8. “Whom you know” and labour market outcomes: An empirical investigation in Ghana. By Baah-Boateng, William; Twum, Eric; Twumasi Baffour, Priscilla

  1. By: Olivier Bochet; Mathieu Faure; Yan Long; Yves Zenou (Division of Social Science)
    Abstract: We consider an aggregative game of competition in which agents have an imperfect knowledge about the set of agents they are in competition with. We model agent’s perceived competitors by a network in which each agent is assumed to only have information on the activities of their direct neighbors. In this framework, a natural equilibrium concept emerges, the peer-consistent equilibrium (PCE). In a PCE, each agent chooses an action level that maximizes her subjective perceived utility and the action levels of all individuals in the network must be consistent. We decompose the network into communities and completely characterize peer-consistent equilibria by identifying which sets of agents can be active in equilibrium. An agent is active if she either belongs to a strong community or if few agents are aware of her existence. We show that there is a unique stable PCE. We provide a behavioral foundation of eigenvector centrality, since, in any stable PCE, agents’ action levels are proportional to their eigenvector centrality in the network. We illustrate our results with two well-known models: Tullock contest function and Cournot competition.
    Date: 2021–09
  2. By: Anna Gerke (Audencia Recherche - Audencia Business School); Geoff Dickson; Hagen Wäsche
    Abstract: Research question: This study contributes to our understanding of how network structures influence cluster governance and consequently cluster outcomes. We investigate the relational structure of cross-sectoral sport clusters and how these influence network governance. Research methods: We employed a mixed methods approach, combining qualitative research data and social network analysis (SNA). Forty-nine interviews were conducted with employees from the surfing clusters in Aquitaine (France) and Torquay (Australia). The interview transcripts were subjected to two rounds of coding prior to SNA on an aggregated actor level. Results and findings: Findings from both clusters show the core is comprised of five actor types, while five other actor types are peripheral. The French case is a Network Administrative Organisation-governed Network while the Australian case is a Leading Group-governed Network. Implications: This article contributes to knowledge on network governance, more specifically on network governance in sport clusters. We extend existing theory on network governance by suggesting a fourth, intermediate mode of network governance, the leading group-governed network. Furthermore, our research provides insights for sport clusters, an under-researched context in interorganisational sport networks.
    Keywords: network governance,interorganisational,sport cluster,mixed methods,network analysis
    Date: 2021–09–14
  3. By: Kangogo, Moses (Tasmanian School of Business & Economics, University of Tasmania); Volkov, Vladimir (Tasmanian School of Business & Economics, University of Tasmania)
    Abstract: Until recently, there has been a growing research focusing on how to predict systemic risks to minimise the recurrence of financial crises, while the importance of understanding how network exposure contributes to the spread of financial distress in the financial system has been largely underestimated. This paper investigates whether network exposure contributes to both shock transmission and absorption. We utilise data from 45 economies and our findings show that both network intensity and interconnectedness in the financial system have impact on increasing network exposure. We also demonstrate how to estimate network intensity in the financial system. Our results indicate that an increased network intensity parameter is associated to period when the financial system is under stress.
    Keywords: Financial markets, financial networks, financial stability
    JEL: G15 G10 G01 C21
    Date: 2021
  4. By: Dike Chukwudi Henry
    Abstract: We study properties of collective action problems bounded by minimal contributions as well as endowment and variable contributions are neighbourhood dependent. We relate nearness to non-interior agents and its implication for interior contribution. Here, we see the aspects of node distance to non-interior agents which have implications for interior agents. Endowments may be redistributed among agents. We highlight strict conditions for budget balanced transfers for which neighbourhood contributions and individual residual consumption’s are invariant. Agents may or may not be concerned about neighbourhood outcomes. We find that welfare is self correcting and neither cases are relevant to the overall welfare impact of neutral transfers.
    Keywords: Centrality; Contagion; Neutrality; Peer Effect
    JEL: C72 D85 H41
    Date: 2021–06
  5. By: Nadia von Jacobi; Vito Amendolagine
    Abstract: We propose a methodology inspired by ecology to map the complex interdepen- dencies between cultural and institutional factors - controlling for other socioeco- nomic and structural characteristics. We characterize interdependencies as asym- metric symbiotic relations, distinguishing between ‘hosts’ that nurture other factors and ‘symbionts’ that reversely feed on the former. We use correlation network anal- ysis to compute a map of multiple such interdependencies for Brazil, which has a vast territory, internally diversified historical paths and a multilevel governance structure. We set the empirical analysis at the municipality level and find that in- stitutional factors tend to be symbionts, whereas cultural factors tend to be hosts. However, our results also show that institutions assume multiple roles within a com- plex network of interdependencies, often becoming themselves habitat for others or transmittors of indirect effects.
    Keywords: Institutions, Culture, Symbiosis, Correlation network analysis, Brazil
    JEL: O17 O43 C18 D02 H70
    Date: 2021
  6. By: Csóka, Péter; Herings, P. Jean-Jacques (RS: GSBE Theme Data-Driven Decision-Making, RS: GSBE Theme Conflict & Cooperation, Microeconomics & Public Economics)
    Abstract: We study bankruptcy problems in financial networks in the presence of general bankruptcy laws. The set of clearing payment matrices is shown to be a lattice, which guarantees the existence of a greatest and a least clearing payment. Multiplicity of clearing payment matrices is both a theoretical and a practical concern. We present a new condition for uniqueness that generalizes all the existing conditions proposed in the literature. Our condition depends on the decomposition of the financial network into strongly connected components. A strongly connected component which contains more than one agent is called a cycle and the involved agents are called cyclical agents. If there is a cycle without successors, then one of the agents in such a cycle should have a positive endowment. The division rule used by a cyclical agent with a positive endowment should be positive monotonic and the rule used by a cyclical agent with a zero endowment should be strictly monotonic. Since division rules involving priorities are not positive monotonic, uniqueness of the clearing payment matrix is a much bigger concern for such division rules than for proportional ones. We also show how uniqueness of clearing payment matrices is related to continuity of bankruptcy rules.
    JEL: C71 G10
    Date: 2021–09–20
  7. By: Chakraborty, Tanika; Mukherjee, Anirban; Saha, Sarani; Shukla, Divya
    Abstract: We study the role of formal institutions of contract enforcement in facilitating investments in small and medium firms(MSME). In a framework where established entrepreneurs can enforce contracts informally using their network ties and hierarchical advantage, we argue that an efficient formal judiciary helps entrepreneurs without any ties to informal business networks, disproportionately more. We test our theoretical prediction using a novel administrative panel-data from Indian courts and the nationally representative MSME survey data. Empirically, we treat entrepreneurs from disadvantaged castes (SC-ST) as those without traditional business-network ties. We find that improvement in court quality has a disproportionately larger impact on the investment decisions of SC-ST entrepreneurs. On average, if the time taken for a court to clear all existing cases reduces by 1 year, the initial gap in the probability of investing, between SC-ST and other entrepreneurs, gets reduced by 0.6-0.7 percentage points.
    Keywords: Judiciary,Duration Index,MSME,Entrepreneurship
    JEL: K12 L26 O17
    Date: 2021
  8. By: Baah-Boateng, William; Twum, Eric; Twumasi Baffour, Priscilla
    Abstract: The relevance of social networks sometimes referred to in Ghana as “whom you know” in the job acquisition process and its effect on labour market outcomes (wages, job satisfaction and job tenure) have been highlighted by a number of studies. Most of these studies have concentrated largely on monetary post-hire outcomes with limited research on non-pecuniary aspects. Using a cox proportional hazard model to analyse a survey of 150 formal sector workers in the services sector in Accra, the study observes that first, jobs acquired through the help of workers’ friends and relatives did not last long. The first jobs could be a stepping-stone for better jobs. This effect is however not statistically significant after controlling for individual and firm-level covariates. Conclusions are however made with caution due to the small sample size and the nature of respondents’ majority of whom are highly educated and relatively younger. Future research can explore further social networks and labour markets particularly in Africa where familiarity and identical ethnic bonds are visible and stronger.
    Keywords: Social networks, Job tenure, Cox proportional hazard model.
    JEL: J63
    Date: 2019–12

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