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on Network Economics |
| By: | Antoine Mandel; Van-Quy Nguyen; Bach Dong-Xuan |
| Abstract: | We provide a strategic model of the formation of production networks that subsumes the standard general equilibrium approach. The objective of firms in our setting is to choose their supply relationships so as to maximize their profit at the general equilibrium that unfolds. We show that this objective is equivalent to the maximization by the firms of their eigenvector centrality in the production network. As is common in network formation games based on centrality, there are multiple Nash equilibria in our setting. We have investigated the characteristics and the social efficiency of these equilibria in a stylized version of our model representing international trade networks. We show that the impact of network structure on social welfare is firstly determined by a trade-off between costs of increasing process complexity and positive spillovers on productivity induced by the diversification of the input mix. We further analyze a variant of our model that accounts for the risks of disruption of supply relationships. In this setting, we characterize how social welfare depends on the structure of the production network, the spatial distribution of risks, and the process of shock aggregation in supply chains. We finally show that simple trade policies characterized by sets of links that are either prevented or catalyzed can be a powerful equilibrium selection device. |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2401.08929&r=net |
| By: | Ben Klemens |
| Abstract: | About two million U.S. corporations and partnerships are linked to each other and human investors by about 15 million owner-subsidiary links. Comparable social networks such as corporate board memberships and socially-built systems such as the network of Internet links are "small worlds, " meaning a network with a small diameter and link densities with a power-law distribution, but these properties had not yet been measured for the business entity network. This article shows that both inbound links and outbound links display a power-law distribution with a coefficient of concentration estimable to within a generally narrow confidence interval, overall, for subnetworks including only business entities, only for the great connected component of the network, and in subnetworks with edges associated with certain industries, for all years 2009-2021. In contrast to other networks with power-law distributed link densities, the network is mostly a tree, and has a diameter an order of magnitude larger than a small-world network with the same link distribution. The regularity of the power-law distribution indicates that its coefficient can be used as a new, well-defined macroeconomic metric for the concentration of capital flows in an economy. Economists might use it as a new measure of market concentration which is more comprehensive than measures based only on the few biggest firms. Comparing capital link concentrations across countries would facilitate modeling the relationship between business network characteristics and other macroeconomic indicators. |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2401.12118&r=net |
| By: | Battiston, Diego Ezequiel; Blanes I Vidal, Jordi; Kirchmaier, Tom; Szemeredi, Katalin |
| Abstract: | We study the interaction between horizontal (peer) and vertical (manager) social factors in workers' motivation. In our setting, individuals work using open-plan desks. Using a natural experiment, we identify a sharp increase in workers' productivity following the occupation of adjacent desks. We link this peer pressure effect to two key aspects of the worker-manager relation. First, we find stronger peer pressure when managers monitor workers less. Second, we find stronger peer pressure among workers performance-evaluated by the same manager. In a set of counterfactual exercises, we illustrate how organisations could take advantage of these interdependencies to increase worker productivity. |
| Keywords: | social incentives; teamwork; peer pressure; monitoring; managers; peer effects; organisations; productivity |
| JEL: | D23 M11 |
| Date: | 2023–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:121319&r=net |