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on Network Economics |
| By: | Emmanuel Dhyne; Ken Kikkawa; Xianglong Kong; Magne Mogstad; Felix Tintelnot |
| Abstract: | This paper presents a tractable model of endogenous production networks with fixed costs associated with the formation of links between firms. The model consists of a finite number of firm types producing differentiated products. Each firm is characterized by firm-specific parameters describing its CES production function, firm-specific domestic and foreign demand shifters, and a firm-specific set of potential suppliers and buyers. We consider versions of the model in which either the buyer or the supplier initiates the formation of links, and versions in which the production network can be cyclic or acyclic. Our main theoretical result is that the closed economy equilibrium is unique if the set of feasible networks consists only of networks that are acyclic and the buyer initiates the link formation while having full bargaining power in price negotiations with the supplier. We provide examples of multiple equilibria if the supplier initiates the link formation in both cyclic and acyclic feasible networks or if the buyer initiates the link formation in a cyclic production network. We take the acyclic production network model to Belgian data on firm-to-firm production networks and show that it approximates well the salient features of the network. The endogenous network model generates substantial churn in domestic firm-to-firm linkages in response to trade shocks. However, the endogenous network model generates only moderately different welfare changes compared to a model with fixed linkages, suggesting that exogenous production networks can approximate the welfare response to trade shocks reasonably well. |
| JEL: | E0 F1 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30993&r=net |
| By: | De Bacco, Caterina; Contisciani, Martina; Cardoso Silva, Jon; Safdari, Hadiseh; Borges, Gabriela Lima; Baptista, Diego; Sweet, Tracy; Young, Jean-Gabriel; Jeremy, Koster; Ross, Cody T; McElreath, Richard; Redhead, Daniel; Power, Eleanor |
| Abstract: | Social network data are often constructed by incorporating reports from multiple individuals. However, it is not obvious how to reconcile discordant responses from individuals. There may be particular risks with multiply reported data if people’s responses reflect normative expectations—such as an expectation of balanced, reciprocal relationships. Here, we propose a probabilistic model that incorporates ties reported by multiple individuals to estimate the unobserved network structure. In addition to estimating a parameter for each reporter that is related to their tendency of over- or under-reporting relationships, the model explicitly incorporates a term for ‘mutuality’, the tendency to report ties in both directions involving the same alter. Our model’s algorithmic implementation is based on variational inference, which makes it efficient and scalable to large systems. We apply our model to data from a Nicaraguan community collected with a roster-based design and 75 Indian villages collected with a name-generator design. We observe strong evidence of ‘mutuality’ in both datasets, and find that this value varies by relationship type. Consequently, our model estimates networks with reciprocity values that are substantially different than those resulting from standard deterministic aggregation approaches, demonstrating the need to consider such issues when gathering, constructing, and analysing survey-based network data. |
| Keywords: | social network data; mutuality; reliability; variational inference; latent network; network measurement; OUP deal |
| JEL: | C1 |
| Date: | 2023–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:117271&r=net |
| By: | Jian-An Li; Li Wang; Wen-Jie Xie; Wei-Xing Zhou |
| Abstract: | Pesticides are important agricultural inputs to increase agricultural productivity and improve food security. The availability of pesticides is partially achieved through international trade. However, economies involved in the international trade of pesticides are impacted by internal and external shocks from time to time, which influence the redistribution efficiency of pesticides all over the world. In this work, we adopt simulations to quantify the efficiency and robustness of the international pesticide trade networks under shocks to economies. Shocks are simulated based on nine node metrics, and three strategies are utilized based on descending, random, and ascending node removal. It is found that the efficiency and robustness of the international trade networks of pesticides increased for all the node metrics except the clustering coefficient. Moreover, the international pesticide trade networks are more fragile when import-oriented economies are affected by shocks. |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2302.13695&r=net |
| By: | Mathias Bühler |
| Abstract: | A central argument for trade liberalization is that when the ‘gains from trade’ are shared, countries see large gains in economic development. In this paper, I empirically evaluate this argument and assess the impact of elite capture on regional development. Africa provides a unique study ground because the arbitrary placement of country borders during the colonial period partitioned hundreds of ethnic groups across borders. This partitioning is a source of variation in population heterogeneity and cross-country connectedness that is independent of economic considerations. Thus, African borders provide both a credible instrument for bilateral trade flows and enable the assignment of trade flows —and their impacts— to individuals. I find that while ethnic networks increase trade flows, increased trade activity decreases subnational economic development when measured by satellite data or individual wealth. I show that this counter-intuitive result comes from elite groups capturing the gains from trade, with detrimental impacts on trust and democratic progress in society. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10270&r=net |