nep-net New Economics Papers
on Network Economics
Issue of 2023‒10‒02
eight papers chosen by
Alfonso Rosa García, Universidad de Murcia

  1. Team ties, embeddedness, and turnover intentions: integrating social networks and field theory By Sahoo, MadhuBala; Janardhanan, Niranjan S.; Ekkirala, Srinivas
  2. Policy Design from a Network Perspective: Targeting a Sector, Cascade of Links, Network Resilience By Temel, Tugrul; Phumpiu, Paul
  3. Business Cycle Asymmetry and Input-Output Structure: The Role of Firm-to-Firm Networks By Jorge Miranda-Pinto; Alvaro Silva; Eric R. Young
  4. Commodity Price Shocks and Production Networks in Small Open Economies By Alvaro Silva; Petre Caraiani; Jorge Miranda-Pinto; Juan Olaya-Agudelo
  5. Sharing the cost of hazardous transportation networks and the Priority Shapley value By Sylvain Béal; Adriana Navarro-Ramos; Eric Rémila; Philippe Solal
  6. Spatial Production Networks By Costas Arkolakis; Federico Huneeus; Yuhei Miyauchi
  7. Equity Pay In Networked Teams By Krishna Dasaratha; Benjamin Golub; Anant Shah
  8. Approximate Core Allocations for Edge Cover Games By Tianhang Lu; Han Xian; Qizhi Fang

  1. By: Sahoo, MadhuBala; Janardhanan, Niranjan S.; Ekkirala, Srinivas
    Abstract: Although social networks have been examined in teams, an understanding of the consequences of team social network ties on employees’ attitudes beyond team boundaries is hard to come by. Integrating insights from social networks and gestalt field theory, we examine interactive effects of centrality and density of inclusion and exclusion ties in teams on the relationship between employees’ community embeddedness—connectedness with the broader social context—and turnover intentions. In a multi-source field study of 215 employees in 34 teams, we demonstrate that inclusion and exclusion centrality and team exclusion density weaken the effect of community embeddedness on turnover intention.
    Keywords: community embeddedness; gestalt field theory; inclusion/exclusion; team social networks; turnover intentions; Sage deal
    JEL: J50
    Date: 2023–08–20
  2. By: Temel, Tugrul; Phumpiu, Paul
    Abstract: Drawing on input-output data, a computational methodology is proposed to: (i) characterize the upstream and/or downstream network of a targeted (or prioritized) sector i, (ii) uncover the cascade of layers of links in the network constructed, and (iii) measure the degree of network resilience using edge betweenness centrality measure of edges between communities. These objectives are accomplished through three complementary algorithms. The implementation of the algorithms is illustrated using Turkiye’s 2018 input-output production network. Ways to design policies are discussed from a network perspective. The key findings are three-fold. First, in network-based policy design, it is highly critical to consider the interdependencies of regulated and seemingly competitive sectors. Efficiencies gained in liberalized markets via pro-competitive PMR can easily be wasted before final consumers benefit from them as regulated industries may exercise their market power to confiscate part of the efficiency gain created in competitive markets. Improved competition in a single market may not generate the desired outcome even if competition policies perfectly support that market because benefits from competition may not spread over the rest of the network due to disruptions in the cascade of interdependencies concerned. Second, a network-based policy design should start with the identification of the “dominant” source and the “subordinate” sink sector(s), and those in between. The source−sink structure of Turkiye’s manufacturing network illustrates that the manufacturing sector is the most dominant, whereas telecommunications and transport, energy and construction sectors are the potential sinks where large chunk of input flow ends up. Agriculture, finance and oil extraction-mining seem to be interactive sectors. Third, the cascade of three layers of links are identified, and the upstream network of the manufacturing sector is found to have a mediocre level of resilience against the complete disruption of the intermediate layer of the network.
    Keywords: graph theory; input-output production network; network resilience; systemic risk; policy plan- ning; technological change;
    JEL: C45 C67 D24 O21 O33
    Date: 2023–08–26
  3. By: Jorge Miranda-Pinto; Alvaro Silva; Eric R. Young
    Abstract: We study the network origins of business cycle asymmetries using cross-country and administrative firmlevel data. At the country level, we document that countries with a larger number of non-zero intersectoral linkages (denser networks) display a more negatively skewed cyclical component of output. At the firm level, we find that firms with a larger number of suppliers and customers (degrees) display a more negatively-skewed distribution of their output growth. To rationalize these findings, we construct a multisector model with input-output linkages and show that the relationship between output skewness and network density naturally arises once we consider non-linearities in production. In an economy with low production flexibility (inputs are gross complements), denser production structures imply that relying on more inputs becomes a risk that further amplifies the effects of negative productivity shocks. The opposite holds if firms display high production flexibility (inputs are gross substitutes): having more inputs to choose from becomes an opportunity to diversify the effects of negative productivity shocks. We calibrate the model using our rich firm-to-firm network Chilean data and show that more connected firms experience larger declines in output in response to a COVID-19 shock, consistent with the data. We also show that, as in the data, the cross-sectional distribution of output growth in the model displays a fatter left tail during downturns. The previous result is shaped by the interplay between production complementarities and network interconnectedness, rather than by the asymmetry of the shocks. The size of the shock determines the strength of the relationship between degrees and output decline, which highlights the importance of non-linearities and the limitations of local approximations.
    Date: 2022–12
  4. By: Alvaro Silva; Petre Caraiani; Jorge Miranda-Pinto; Juan Olaya-Agudelo
    Abstract: We study the role of domestic production networks in the transmission of commodity price shocks in small open economies. We provide empirical evidence of a strong propagation of commodity price shocks to quantities produced in domestic sectors that supply intermediate inputs to commodity sectors (upstream propagation) and a muted propagation to sectors using commodities as intermediate inputs (downstream propagation). We develop a small open economy production network model to explain these transmission patterns. We show that the domestic production network is crucial in shaping the propagation of commodity prices. The two key mechanisms that rationalize the evidence are i) the foreign demand channel and ii) the input-output substitution channel. These two channels amplify the upstream propagation of commodity price changes, by increasing the demand for noncommodity inputs, and, at the same time, they mitigate the downstream cost channel by allowing firms to use relatively cheaper primary inputs in production.
    Date: 2023–04
  5. By: Sylvain Béal (Université de Franche-Comté, CRESE, F-25000 Besançon, France); Adriana Navarro-Ramos (Université de Saint-Etienne, GATE Lyon Saint-Etienne UMR 5824, F-42023 Saint-Etienne, France); Eric Rémila (Université de Saint-Etienne, GATE Lyon Saint-Etienne UMR 5824, F-42023 Saint-Etienne, France); Philippe Solal (Université de Saint-Etienne, GATE Lyon Saint-Etienne UMR 5824, F-42023 Saint-Etienne, France)
    Abstract: We consider the cost sharing issue resulting from the maintenance of a hazardous waste transportation network represented by a sink tree. The participating agents are located on the nodes of the network and must transport their waste to the sink through costly network portions. We introduce the Liability rule, which is inspired by the principles applied by the courts to settle cost-allocation disputes in the context of hazardous waste. We provide an axiomatic characterization of this rule. Furthermore, we show that the Liability rule coincides with the Priority Shapley value, a new allocation rule on an appropriate class of multi-choice games arising from hazardous waste transportation problems. Finally, we also axiomatize the Priority Shapley value on the full domain of multi-choice games.
    Keywords: Hazardous waste, transportation network, Liability rule, Priority Shapley value, multi- choice games
    JEL: C71 Q53 R42
    Date: 2023–09
  6. By: Costas Arkolakis; Federico Huneeus; Yuhei Miyauchi
    Abstract: We use new theory and data to study how firms endogenously form production networks across regions and countries. Supplier and buyer relationships form depending on firms’ productivity and geographic location. We characterize the normative and positive properties of the spatial distribution of economic activity and welfare in general equilibrium. We calibrate the model using domestic and international firm-to-firm trade data from Chile. Both iceberg trade costs and search and matching frictions are important for aggregate trade flows and production networks. Endogenous formation of production networks leads to larger and more dispersed effects of international and intranational trade cost shocks.
    Date: 2023–02
  7. By: Krishna Dasaratha; Benjamin Golub; Anant Shah
    Abstract: A group of agents each exert effort to produce a joint output, with the complementarities between their efforts represented by a (weighted) network. Under equity compensation, a principal motivates the agents to work by giving them shares of the output. We describe the optimal equity allocation. It is characterized by a neighborhood balance condition: any two agents receiving equity have the same (weighted) total equity assigned to their neighbors. We also study the problem of selecting the team of agents who receive positive equity, and show this team must form a tight-knit subset of the complementarity network, with any pair being complementary to one another or jointly to another team member. Finally, we give conditions under which the amount of equity used for compensation is increasing in the strength of a team's complementarities and discuss several other applications.
    Date: 2023–08
  8. By: Tianhang Lu; Han Xian; Qizhi Fang
    Abstract: We study the approximate core for edge cover games, which are cooperative games stemming from edge cover problems. In these games, each player controls a vertex on a network $G = (V, E; w)$, and the cost of a coalition $S\subseteq V$ is equivalent to the minimum weight of edge covers in the subgraph induced by $S$. We prove that the 3/4-core of edge cover games is always non-empty and can be computed in polynomial time by using linear program duality approach. This ratio is the best possible, as it represents the integrality gap of the natural LP for edge cover problems. Moreover, our analysis reveals that the ratio of approximate core corresponds with the length of the shortest odd cycle of underlying graphs.
    Date: 2023–08

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