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on Network Economics |
| By: | Banchongsan Charoensook (Department of International Business, Keimyung Adams College, Keimyung University) |
| Abstract: | Most literature in strategic network formation shows that there is a substantial tension between stability and efficiency. In this note, I show that such is not the case in the twoway flow model with small decay studied by Bala and Goyal (2000a) and De Jaegher and Kamphorst (2015). Specifically, I show that every link receiver in a Nash network serves as an efficient trans-mitter of information. I also generalize this result to the case of player hetero-geneity and then provide a fine-detail characterization of effiicient networks. |
| Keywords: | Network Formation, Nash Network, Two-way Flow Network, Agent Heterogeneity, Efficient Network |
| JEL: | C72 D85 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2022.12&r= |
| By: | Marcelo Arbex (Department of Economics, University of Windsor); Jessica Faciroli (Department of Economics, Federal University of Juiz de Fora, Brazil); Ricardo da Silva Freguglia (Department of Economics, Federal University of Juiz de Fora, Brazil); Marcel de Toledo Vieira (Department of Statistics, Federal University of Juiz de Fora, Brazil) |
| Abstract: | Are families that live in the same neighborhood and share similar characteristics more likely to participate in welfare programs? Using a unique administrative data set, we study beneficiaries of the Bolsa Familia - the Brazilian cash transfer program - from 2013 to 2015. We analyze data containing information on the living conditions of the most vulnerable families, such as income, household characteristics, schooling, and disability. An eight-digit zip code defines a neighborhood. Families form a network if they live in the same neighborhood and belong to the same racial group. We provide evidence that place of residence and racial group networks are important determinants of the family participation in the program. Individuals in a neighborhood-racial group network are 6.5% more likely to participate in the Bolsa Familia. We conduct several robustness checks - controlling for family unobserved characteristics, network density and coverage (percentiles) distributions - to further qualify our results. |
| Keywords: | Social Program Participation, Social Network, Neighborhood, Race Composition, Bolsa Familia Program, Brazil. |
| JEL: | I38 H53 |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:wis:wpaper:2201&r= |
| By: | Kensuke Fukunaga (Economist, Institute for Monetary and Economic Studies, Bank of Japan (currently, Senior Analyst, UTokyo Economic Consulting Inc., E-mail: kensuke_fukunaga@utecon.net)); Daisuke Miyakawa (Associate Professor, Hitotsubashi University Business School (E-mail: dmiyakawa@hub.hit-u.ac.jp)) |
| Abstract: | How do supply chain networks affect credit supply? To answer this question, we empirically detect clusters of firms by using firm-to- firm transaction data, then measure banks' exposures to those clusters and borrowing firms by using bank-to-firm lending data. Through the panel estimations controlling for unobservable factors potentially affecting credit demand and supply, first, we find that the higher portfolio concentration of banks on the clusters of firms lowers credit supply to less creditworthy firms. Second, we also find that such a pattern is more apparent for banks lending to creditworthy firms. These results suggest that the change in real network propagates to credit supply through banks' risk management. |
| Keywords: | Credit supply, supply chain network, cluster detection |
| JEL: | D22 E44 G11 G21 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:ime:imedps:22-e-08&r= |
| By: | Jay Pil Choi; Christodoulos Stefanadis |
| Abstract: | We examine tippy network markets that accommodate price discrimination. The analysis shows that when a mild equilibrium refinement, the monotonicity criterion, is adopted, network competition may have a unique subgame-perfect equilibrium regarding the winner’s identity; the prevailing brand may be fully determined by its product features. We bring out the concept of the dominant value margin, which is a metric of the effectiveness of divide-and-conquer strategies. The supplier with the larger dominant value margin may always sell to all customers in equilibrium. Such a market outcome is not always socially efficient since a socially inferior supplier may prevail if has a stand-alone-benefit advantage and only a modest network-benefit disadvantage. |
| Keywords: | network externalities, equilibrium uniqueness, price discrimination, monotonicity criterion, dominant value margin, divide and conquer |
| JEL: | L13 L40 D43 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9717&r= |
| By: | Alessandro Ferrari |
| Abstract: | I study the role of industries position in supply chains on the transmission of final demand shocks. First, I use a shift-share design based on destination specific final demand shocks and destination shares to show that shocks amplify upstream. Quantitatively, I find, upstream industries respond to final demand shocks up to three times as much as final goods producers. To organize the reduced form results, I develop a tractable production network model with inventories and study how the properties of the network itself and the cyclicality of inventories interact to determine whether final demand shocks amplify or dissipate upstream. I test the mechanism both by directly estimating the model and in reduced form and I find evidence of the role of inventories in explaining heterogeneous output elasticities. |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2205.03862&r= |
| By: | Luyao Zhang; Xinshi Ma; Yulin Liu |
| Abstract: | Blockchain empowers a decentralized economy by enabling distributed trust in a peer-to-peer network. However, surprisingly, a widely accepted definition or measurement of decentralization is still lacking. We explore a systematization of knowledge (SoK) on blockchain decentralization by reviewing existing studies on various aspects of blockchain decentralization. First, we establish a taxonomy for analyzing blockchain decentralization in the five facets of consensus, network, governance, wealth, and transaction. We find a lack of research on the transaction aspects that closely characterize user behavior. Second, we apply Shannon entropy in information theory to propose a decentralization index for blockchain transactions. We show that our index intuitively measures levels of decentralization in peer-to-peer transactions by simulating blockchain token transfers. Third, we apply our index to empirically analyze the dynamics of DeFi token transfers. Intertemporally, we observe that levels of decentralization converge regardless of the initial levels of decentralization. Comparison of DeFi applications shows that exchange and lending are more decentralized than payment and derivatives. We also discover that a greater return of ether, the native coin of the Ethereum blockchain, predicts a greater decentralization level in stablecoin transfer that includes ether as collateral. Finally, we develop future research directions to explore the interactions between different facets of blockchain decentralization, the design of blockchain mechanisms that achieve sustainable decentralization, and the interplay of decentralization levels and economic factors. |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2205.04256&r= |
| By: | Eric Auerbach; Yong Cai |
| Abstract: | We are interested in the distribution of treatment effects for an experiment where units are randomized to treatment but outcomes are measured for pairs of units. For example, we might measure risk sharing links between households enrolled in a microfinance program, employment relationships between workers and firms exposed to a trade shock, or bids from bidders to items assigned to an auction format. Such a double randomized experimental design may be appropriate when there are social interactions, market externalities, or other spillovers across units assigned to the same treatment. Or it may describe a natural or quasi experiment given to the researcher. In this paper, we propose a new empirical strategy based on comparing the eigenvalues of the outcome matrices associated with each treatment. Our proposal is based on a new matrix analog of the Fr\'echet-Hoeffding bounds that play a key role in the standard theory. We first use this result to bound the distribution of treatment effects. We then propose a new matrix analog of quantile treatment effects based on the difference in the eigenvalues. We call this analog spectral treatment effects. |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2205.01246&r= |
| By: | Jolian McHardy (Department of Economics, University of Sheffield, UK) |
| Abstract: | We develop a network model of differentiated transport services explicitly incorporating interchangeable and rival aspects, characteristic of many transport systems, allowing exploration of the implications of strategic interaction on pricing amongst multiple rival operators within and across modes. The model offers a framework for studying the impacts of alternative policy scenarios with a wide variety of applications across the transport sector in a way that is tractable and allows meaningful analysis. We illustrate some of the uses of the framework through a series of applications which demonstrate the importance of explicitly recognising the dual rival and interchangeable aspects across multiple operators. Amongst other things, we show that the base model, which we characterise as n = 2, and which has been widely employed in the transport literature, in some respects represents a special case and that the relative size of equilibrium profit, consumer surplus and welfare across regimes as well as the rankings of different regimes across these performance indicators are non-monotonic in n, hence justifying a framework which explicitly allows n to vary. One application examines the performance of the multi-operator ticketing card scheme under guidelines operating in the UK local bus sector. This features as a key part in the UK government’s local bus transport strategy but is also currently under statutory review. A calibration exercise shows this regime may offer higher profit, consumer surplus and welfare as well as a more extensive service provision than the ‘free-market’ case. |
| Keywords: | Multi-operator; Transport Networks; Pricing; Welfare |
| JEL: | D43 L13 L92 R48 |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2022009&r= |
| By: | Florent Dubois (UOR - University of Reading, EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Christophe Muller (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université) |
| Abstract: | We contend that residential segregation should be an essential component of the analyses of socio-ethnic income gaps. Focusing on the contemporary White/African gap in South Africa, we complete Mincer wage equations with an Isolation index that reflects the level of segregation in the local area where individuals dwell. We decompose the income gap distribution into detailed composition and structure components. Segregation is found to be the main contributor of the structure effect, ahead of education and experience, and to make a sizable contribution to the composition effect. Moreover, segregation is found to be harmful at the bottom of the African income distribution, notably in relation to local informal job-search networks, while it is beneficial at the top of the White income distribution. Specific subpopulations are identified that suffer and benefit most from segregation, including for the former, little educated workers in agriculture and mining, often female, confined in their personal networks. Finally, minimum wage policies are found likely to attenuate most segregation's noxious mechanisms, while a variety of policy lessons are drawn from the decomposition analysis by distinguishing not only compositional from structural effects, but also distinct group-specific social positions. |
| Keywords: | Residential segregation,Post-Apartheid South Africa,Distribution analysis,Generalized decompositions |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03622711&r= |