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on Network Economics |
| By: | Matthew O. Jackson |
| Abstract: | I discuss economic and social sources of inequality and elaborate on the role of social networks in inequality, economic immobility, and economic inefficiencies. The lens of social networks clarifies how the entanglement of people's information, opportunities, and behaviors with those of their friends and family leads to persistent differences across communities, resulting in inequality in education, employment, income, health, and wealth. The key role of homophily in separating groups within the network is highlighted. A network perspective's policy implications differ substantially from a narrower economic perspective that ignores social structure. I discuss the importance of ``policy cocktails'' that include aspects that are aimed at both the economic and social forces driving inequality. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.13016 |
| By: | Jihwan Do (Yonsei University); Lining Han (Wuhan University); Xiaoxi Li (Wuhan University) |
| Abstract: | This paper studies the monopoly data seller's problem when users are connected through an information-sharing network. When users' prior information is sufficiently noisy, the seller's optimal strategy targets a maximum independent set - the largest subset of users with no direct links. In this regime, data precision falls as the network becomes denser, yet we show - using the Caro–Wei bound, a classical result in graph theory - that it remains strictly above the socially efficient level in most networks. Further, any core-periphery network is Pareto-efficient, and any Pareto-efficient network exhibits a quasi-core-periphery structure. When users can coordinate network formation, the resulting equilibrium network also takes this form. Finally, we quantify the value of network information by comparing the seller profit to that with a misbelief. |
| Keywords: | Information markets, information-sharing network, monopolistic pricing, maximum independence set |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:yon:wpaper:2025rwp-249 |
| By: | Aristide Houndetoungan |
| Abstract: | I propose a flexible structural model to estimate peer effects across various quantiles of the peer outcome distribution. The model allows peers with low, intermediate, and high outcomes to exert distinct influences, thereby capturing more nuanced patterns of peer effects than standard approaches that are based on aggregate measures. I establish the existence and uniqueness of the Nash equilibrium and demonstrate that the model parameters can be estimated using a straightforward instrumental variable strategy. Applying the model to a range of outcomes that are commonly studied in the literature, I uncover diverse and rich patterns of peer influences that challenge assumptions inherent in standard models. These findings carry important policy implications: key player status in a network depends not only on network structure, but also on the distribution of outcomes within the population. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.12920 |
| By: | Ambler, Kate; Bloem, Jeffrey R.; de Brauw, Alan; Herskowitz, Sylvan; Wagner, Julia |
| Abstract: | A key challenge in systematically collecting data on intermediary agri-food value chain actors is that value chains take the form of a network, with actors linked by a series of transactions. Moreover, we have limited ex ante knowledge about the structure or scale of these networks, which complicates the construction of valid sampling frames and limits traditional random sampling approaches to collect data. To address these challenges, we adapt the respondent-driven sampling approach to collect data on intermediary agri-food value chain actors within their transaction-linked network and implement this approach in the arabica coffee and soybean value chains in Uganda and the rice and potato value chains in Bangladesh. We observe meaningful heterogeneity in the structure and scale of agri-food value chains across commodities and countries. Focusing on traders, we show that the respondent-driven sampling approach generates a larger sample of traders who differ in observable characteristics (i.e., value added, enterprise scale, and financial access) compared to a sub-sample of traders generated in a way that mimics traditional random sampling approaches used to study traders. We conclude by discussing how this respondent-driven sampling approach, applied within transaction-linked networks, can provide a useful data collection method for studying intermediary agri-food value chain actors. |
| Keywords: | data; agrifood systems; value chains; networks; arabica coffee; soybeans; rice; potatoes; Bangladesh; Uganda; Eastern Africa; Southern Asia |
| Date: | 2024–05–31 |
| URL: | https://d.repec.org/n?u=RePEc:fpr:gsspwp:144207 |
| By: | Oscar Perello |
| Abstract: | Supply chain disruptions hamper the gains from globalization and require costly investments in resilience. I study how input sourcing through specialized intermediaries helps firms to mitigate disruptions in risky markets. Combining customs and tax records from Chile, I document that the share of intermediated imports rises with supply chain risk, as intermediaries maintain more diversified and robust supply networks. These facts motivate a model of global sourcing with costly supplier matching, insecure supply relationships, and access to intermediaries. Heterogeneous producers balance input prices and disruption probabilities across locations to minimize expected production costs. More productive firms match with multiple suppliers per location, while less productive firms contract with intermediaries, paying higher markups for a more resilient network than they could build directly. Despite double marginalization, intermediation relaxes the efficiency-risk trade-off due to greater supply network operability. Model quantification reveals sizable profit losses from disruptions, which intermediaries halve for mid-size producers that lack the scale to diversify. Intermediation is thus instrumental for supply chain resilience, suggesting a role for policies that make these services more accessible. |
| Keywords: | Trade, global value chains, supply chain risk, trade intermediation, diversification |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpm:docweb:2503 |
| By: | Alessandra Cascarico (Bocconi University, Dondena and CESifo.); Edoardo Di Porto (CSEF, INPS, Università di Napoli Federico II, UCFS, Uppsala University); Joanna Kopinska (University of Rome La Sapienza); Salvatore Lattanzio (Bank of Italy and Dondena) |
| Abstract: | Relying on a reform that increased parental leave generosity, we estimate workplace peer effects in the use of leave, with a focus on fathers. Coworker fathers are more likely to take parental leave when exposed to a higher share of peer fathers, who are exogenously affected by the reform. This effect is stronger in larger establishments, those with higher levels of social capital and higher use of parental leave before the reform. We also document that own-gender peer effects are larger than cross-gender influences, and show the absence of career costs for fathers exposed to the reform, which provides an explanation for our findings. Peer effects extend to coworker fathers’ partners, who experience an increase in earnings and labor supply. Peer effects are observed also for mothers, but the response of their partners is less pronounced. |
| Keywords: | Parental leave, Peer effects, Career costs, Female labor market participation. |
| JEL: | G33 K22 L25 O52 |
| Date: | 2025–04–15 |
| URL: | https://d.repec.org/n?u=RePEc:sef:csefwp:748 |
| By: | Sam Jones; Felix Schilling; Finn Tarp |
| Abstract: | We link a new database of politically exposed persons with the complete register of firms established in Mozambique since Independence. Focusing on the network of connections between firm owners, we use a generalized event study analysis to show that holders of political office achieve significant gains in the number of companies owned and their structural power (centrality) within the business-owner network. These gains are concentrated in joint-stock firms active in provision of business services, and our results persist when we aggregate the data to the family-level. |
| Keywords: | Firm ownership, Benefits, Political connections, Rent-seeking, Mozambique |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-47 |
| By: | Craig S. Wright (Department of Economics, University of Exeter) |
| Abstract: | BTC, diverging fundamentally from the original Bitcoin protocol, has attained outsized market capitalisation despite abandoning Bitcoin's primary function as a scalable, traceable system for electronic cash. The Lightning Network, frequently misrepresented as a Layer 2 solution, is demonstrably a separate payment routing structure that never requires final settlement on-chain. This paper deconstructs the economic, technical, and ideological divergence of BTC from Bitcoin, critiques the architectural and empirical failure of Lightning, and examines the speculative mispricing driven by false narratives, branding confusion, and structural ignorance. |
| Keywords: | BTC, Bitcoin, Lightning Network, digital cash, scalability, protocol divergence, Layer 2, micropayments, transaction finality, network economics |
| JEL: | E42 G18 L86 O33 |
| Date: | 2025–07–01 |
| URL: | https://d.repec.org/n?u=RePEc:exe:wpaper:2502 |
| By: | Hisaki KONO; Hoang-Minh LE; Manabu NOSE; Yasuyuki SAWADA |
| Abstract: | This paper examines the local economic impacts of industrial zones (IZs) in Vietnam, focusing on how their sectoral orientation within production networks shapes effectiveness. Using panel data on registered firms and a newly compiled dataset on IZ locations and sectoral compositions, we estimate the dynamic effects of IZ establishment on firm entry and employment through staggered difference-in-differences and synthetic control methods. We find that IZs lead to sustained increases in both firm and worker density over a 6–10 year horizon, indicating substantial local economic gains. These effects are particularly pronounced in zones oriented toward downstream industries—those that create demand for upstream suppliers—while upstream orientation does not predict stronger outcomes. We further show that backward production linkages mediate these gains, suggesting that demand-side constraints, rather than input frictions, may be more binding in developing country contexts. The results highlight not only the overall effectiveness of IZs but also the importance of aligning industrial policy design with the structure of production networks to maximize spatial development benefits. |
| Keywords: | Industrial zones, production linkage |
| JEL: | O12 O14 R11 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:kue:epaper:e-25-005 |
| By: | Maxim Alekseev; Xinjue, Lin |
| Abstract: | Policymakers increasingly use trade instruments to address national security concerns. This paper studies optimal policy for dual-use goods—items such as semiconductors or drones that have both military and civilian applications. We begin by empirically documenting that the regulation and trade flows of dual-use goods respond to changes in the security environment over time. To put structure on the defense externality, we introduce military procurement into a multi-country general equilibrium network model and add a military contest to the national welfare function. In a simple two-country case, optimal export taxes depend on a trade-off between the good’s military centrality and its distortion centrality. Military centrality is a network-adjusted sales share to the foreign military; distortion centrality reflects taxation misallocation in the domestic economy from roundabout imports. Using U.S. defense procurement data, we construct a measure of military use across goods, which ranges from zero to one, by scaling the U.S. closed-economy military centrality by import demand elasticities. Our measure effectively evaluates policy restrictions and military content in trade flows. To quantify the macroeconomic magnitude of the consumption-security trade-off, we calibrate our model to a potential U.S.-China conflict. The revealed preference estimate of the value placed on the probability of winning the conflict equals 2.5 times the annual U.S. GDP. |
| Keywords: | Trade Policy; International Trade Organizations, Optimal taxation, Networks, Military |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpm:docweb:2502 |
| By: | Inaki Veruete Villegas (Charles University, Institute of Economic Studies at Faculty of Social Sciences & The Environment Center, Czech Republic & BETA, CNRS, University of Strasbourg); Milan Scasny (Charles University, Institute of Economic Studies at Faculty of Social Sciences and The Environment Center, Czech Republic.) |
| Abstract: | The current geopolitical landscape, exemplified by the Russian invasion of Ukraine, has heightened concerns about energy security. This study delves into the nexus of energy security and natural gas utilization in the Czech Republic, offering a thorough analysis amid these turbulent times. Despite the fact that the environment/energy-extended input-output models have been significantly improved, they still fail to fully capture a sector’s role in an economic system characterized as a network of sectors as they primarily analyze sectors as both ends of the supply chain, ignoring a significant role of transmission sectors. We overcome this gap by applying a multidimensional approach to scrutinize the energy supply chain in order to assess the repercussions of heightened natural gas prices post-Russian invasion. Specifically, we combine domestic energy input-output demand and price models to assess the economic impacts under constrained alternative energy scenarios, particularly relevant given the challenges of replacing Russian gas. Additionally, leveraging network analysis techniques —node and edge betweenness centrality—and the hypothetical extraction method are used to identify critically important structural elements within the country’s natural gas consumption chain. While the former pinpoints vital transmission sectors based on gas flow, the latter gauges sectoral significance by simulating complete disconnections, without being influenced by the number of times the sector appears in the supply chain path. Last, we develop a complete map of the embodied energy flows. Structural Path Analysis traces intermediate product flows, enabling the quantification of embodied energy across the supply chain and its representation as a tree-like structure. Our findings reveal significant implications of natural gas price fluctuations on key manufacturing industries, notably those engaged in international trade which are vulnerable to energy supply and price disruptions. We emphasize the critical role of sectors providing essential household goods and services, like energy, food, and transportation. Strategic interventions may be necessary to safeguard domestic demand and the competitive edge of vital sectors like automotive. As energy security remains a dynamic and evolving challenge, our research contributes significantly to the ongoing discourse on energy resilience, particularly for countries dependent on energy imports. Despite the fact our study is applied to the energy field, this framework is useful to analyze the footprint of any inputs, including usage of critical materials, environmental inputs, or emissions, which face similar complexities. |
| Keywords: | Energy-Extended Input-Output Aanalysis; Energy Supply Chain; Natural Gas Footprint; Embodied Energy; Betwenness Centrality; Hypothetical Extraction; Structural Path Analysis; Input-Output Price Model |
| JEL: | C67 Q43 H56 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:fau:wpaper:wp2024_18 |
| By: | Max Stick, Christoph Schimmele, Maciej Karpinski and Amélie Arsenault |
| Abstract: | This study used data from the 2020 General Social Survey to examine the social connectedness of immigrant women to Canadian society. The size and composition of immigrant women’s personal networks varied by their sociodemographic, immigrant-specific and residential characteristics, and by population group. Most subgroups of immigrant women had smaller social networks than their Canadian-born counterparts, although for some, the difference was small. Most of the differences between immigrants and Canadian-born women were related to weak ties, and for most subgroups there were no or fewer differences in the number of strong ties that composed their networks. Most subgroups of immigrant women had more inter-ethnic friends than Canadian-born women, even though their networks were mostly homogenous in ethnic composition. |
| Keywords: | Immigrant women, social networks, social capital, immigrant integration |
| JEL: | J23 M21 |
| Date: | 2024–04–24 |
| URL: | https://d.repec.org/n?u=RePEc:stc:stcp8e:2024004e |