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on Network Economics |
| By: | Feldman, Stanley (Stony Brook University); Hjerm, Mikael (Umeå University); Nilsson, William (University of the Balearic Islands); Stillman, Steven (Free University of Bozen/Bolzano); Romero Ciavatto, José Gabriel (University of the Balearic Islands) |
| Abstract: | The literature on political socialization highlights the importance of parents and friends, but it is rare to find studies analyzing these socializing agents in the same model. In contrast, friends are often limited to one or a few friends that may not account for the actual effect of friends. The reason is that standard datasets do not collect information on the entire network of people's friends. Importantly, having an incomplete network can lead to biased estimates of network effects. To overcome this problem, we surveyed 419 students who recruited an additional 4500 social contacts who answered a shorter survey. Controlling for potentially endogenous network formation and using second-order peers to instrument for direct network effects, we find important political socialization from parents and friends on anti-immigrant sentiment and voting intentions among the students we survey. We also show that results differ if we only examine the impact of classroom peers, as is typically done in the literature. Surveying social contacts is a promising way to reach a complete social network, which overcomes data limitations in the current political socialization literature. |
| Keywords: | political socialization, social interactions, anti-immigrant sentiments, authoritarianism, voting intentions |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17818 |
| By: | Kalina Manova; Andreas Moxnes; Oscar Perelló; Kalina B. Manova |
| Abstract: | This paper examines intermediation in production networks to unpack the firm attributes and matching costs that govern firm-to-firm networks and the gains from trade. Exploiting rich customs data for Chile, we show that exporters of all sizes use intermediaries, mix trade modes across buyers, and set lower prices on intermediated flows. We rationalize these facts in a model of network formation with suppliers of heterogeneous productivity and matchability, buyers of heterogeneous productivity, and intermediaries that reduce matching costs for a brokerage fee. Empirical evidence on trade activity across firms and countries corroborates the model, and informs how geographic distance, logistics and customs efficiency, formal institutions, and cultural-linguistic similarity shape network costs. Model estimation reveals that sellers’ attributes are negatively correlated, such that intermediaries enable highly productive sellers with low matchability to reach smaller buyers. This amplifies the welfare gains from intermediation due to wider and deeper network connectivity. |
| Keywords: | production networks, intermediation, productivity, matching costs |
| JEL: | F10 F12 F14 F23 L11 L14 L81 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11717 |
| By: | John S. McAlister; Jesse L. Brunner; Danielle J. Galvin; Nina H. Fefferman |
| Abstract: | Global trade of material goods involves the potential to create pathways for the spread of infectious pathogens. One trade sector in which this synergy is clearly critical is that of wildlife trade networks. This highly complex system involves important and understudied bidirectional coupling between the economic decision making of the stakeholders and the contagion dynamics on the emergent trade network. While each of these components are independently well studied, there is a meaningful gap in understanding the feedback dynamics that can arise between them. In the present study, we describe a general game theoretic model for trade networks of goods susceptible to contagion. The primary result relies on the acyclic nature of the trade network and shows that, through the course of trading with stochastic infections, the probability of infection converges to a directly computable fixed point. This allows us to compute best responses and thus identify equilibria in the game. We present ways to use this model to describe and evaluate trade networks in terms of global and individual risk of infection under a wide variety of structural or individual modifications to the trade network. In capturing the bidirectional coupling of the system, we provide critical insight into the global and individual drivers and consequences for risks of infection inherent in and arising from the global wildlife trade, and any economic trade network with associated contagion risks. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2504.06905 |
| By: | Claudia Kl\"uppelberg; Mario Krali |
| Abstract: | We present a methodology for causal risk analysis in a network. Causal dependence is formulated by a max-linear structural equation model, which expresses each node variable as a max-linear function of its parental node variables in a directed acyclic graph and some exogenous innovation. We determine directed~paths~responsible~for extreme risk propagation in the network. We give algorithms for structure learning and parameter estimation and apply them to a network of financial data. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2504.00523 |
| By: | Nirjhor, Sams Afif; Liu, Fangyue; Nakamaru, Mayuko |
| Abstract: | A general supply chain is a division of labor of an arbitrary number of subtasks, which has asymmetric interactions among the subtask-holder groups. To sustain a supply chain, cooperation among the subtask-holders is a must. We construct a general network model of supply chain with a finite number of roles with a single output, where the supply of faulty products is possible and a supply chain never stops on the way. We consider that cooperators and defectors exist in each subtask-holder group in a supply chain; cooperators of a subtask-holder group pay a cost of cooperation to maintain and upgrade the quality of the product, defectors however do not pay any cost, and thus the product quality reduces. In some supply chains, more cooperators upgrade the quality of the product more, and players can obtain a better reputation defined as a bonus that is given to all players. We found that the supply chain with a bonus confronts the social dilemma. We make replicator equations of asymmetric games to investigate the evolution of cooperation in a supply chain. We found that not the benefit from supply but the cost of cooperation influences the dynamics. As a result, the network structure of the supply chain never influences the dynamics. Sanction on the defectors induces the evolution of cooperation and non-linear bonus functions promote co-existences of cooperator groups and defector groups. The bonus functions determine whether the length of the supply chain promotes the evolution of cooperation or not. |
| Date: | 2025–04–24 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:3679n_v1 |
| By: | Motoki Otsuka |
| Abstract: | Graphon games are a class of games with a continuum of agents, introduced to approximate the strategic interactions in large network games. The first result of this study is an equilibrium existence theorem in graphon games, under the same conditions as those in network games. We prove the existence of an equilibrium in a graphon game with an infinite-dimensional strategy space, under the continuity and quasi-concavity of the utility functions. The second result characterizes Nash equilibria in graphon games as the limit points of asymptotic Nash equilibria in large network games. If a sequence of large network games converges to a graphon game, any convergent sequence of asymptotic Nash equilibria in these large network games also converges to a Nash equilibrium of the graphon game. In addition, for any graphon game and its equilibrium, there exists a sequence of large network games that converges to the graphon game and has asymptotic Nash equilibria converging to the equilibrium. These results suggest that the concept of a graphon game is an idealized limit of large network games as the number of players tends to infinity. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2504.01944 |
| By: | A. I. C. Pereda |
| Abstract: | This paper examines risk measures, systemic risk, and default cascades in global equity markets using a network of 20 assets (13 from Brazil, 7 from developed markets) over the period 2015-2025. An adapted Gai-Kapadia framework models exposure-based networks ($\theta = 0.3, 0.5$), incorporating market correlations and volatility. Monte Carlo simulations ($n = 1000$) assess default cascades triggered by shocks ranging from 10\% to 50\%. Value-at-Risk (VaR) and Conditional VaR (CVaR) highlight higher tail risks in emerging markets. Results suggest that clustering in Brazilian assets amplifies cascades, while developed markets exhibit greater resilience. These insights contribute to financial stability policies. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2504.01969 |
| By: | Yükçü, Onur |
| Abstract: | This paper investigates how ethnic networks shaped trade among Armenian, Greek, Jewish, and Turkish traders in Istanbul after the collapse of the OttomanEmpire. I draw on a novel micro-dataset of 3, 777 transactions extracted frombulletins of the Istanbul Commodity Exchange published in December 1928.These sources provide detailed information on commodity type, geographicalorigin, price, quantity, contract type, and the names of buyers and sellers. Incontrast to much of the trade literature that relies on administrative unit-levelethnic or religious shares, the use of transaction-level data enables a more preciseanalysis of the role of ethnic networks in commerce. Building on the theoreticalframeworks developed by Janet T. Landa (1981) and Avner Greif (1989, 1993, 2006), I also test how ethnic homophily operated through certain channels. Theempirical findings reveal the existence of a Greek trade coalition in post-OttomanIstanbul: Greek traders were significantly more likely to transact with one anotherand less likely to trade with Armenians, Jews, or Turks. Greek-Greek transactionsare associated with an average increase of approximately 26% in transaction valuein flour trade. The Greek trade coalition appears to have reduced transaction costsfor its members, equivalent to approximately 10% of the seller's profit. Since Icontrol for flour quality, the findings on transaction value and costs are notconfounded by quality-related variation. Moreover, in long-distance tradeinvolving agricultural imports, Greek traders were more likely to trade with one another. |
| Keywords: | Homophily; Greek merchants; Ottoman economic history; Interwar Turkey; Cultural networks |
| JEL: | N85 F14 D85 |
| Date: | 2025–04–22 |
| URL: | https://d.repec.org/n?u=RePEc:cte:whrepe:46490 |
| By: | Antonio Cabrales; Lorenzo Ductor; Ericka Rascón-Ramírez; Ismael Rodriguez-Lara |
| Abstract: | Women often find themselves in teams that hinder their productivity and earnings. We analyze the role of homophily and gender stereotypes in preferences for team formation and examine the effect of information on changing these preferences. We find that women are expected to perform better in female-type tasks (such as text and emotion-recognition). However, people prefer forming teams with their same gender. Our findings suggest that information can mitigate -but it does not eliminate- the influence of homophily on team formation. |
| Keywords: | gender differences, expectations, collaboration, network formation, team production |
| JEL: | C91 D03 D60 D81 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11706 |