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on Network Economics |
| By: | Christian Growitsch; Tooraj Jamasb; Michael Pollitt |
| Abstract: | Quality of service is of major economic significance in natural monopoly infrastructure industries but is generally not reflected in efficiency analysis. In this paper we present an efficiency analysis of electricity distribution networks using a sample of about 500 electricity distribution utilities from seven European countries. We apply the stochastic frontier analysis (SFA) method on multi-output translog input distance function models to estimate cost and scale efficiency with and without incorporating quality of service. We show that introducing the quality dimension into the analysis affects estimated efficiency significantly. In contrast to previous research, smaller utilities seem to indicate lower technical efficiency when incorporating quality. We also show that incorporating quality of service does not alter scale economy measures. Quality of service should be an integrated part of efficiency analysis and incentive regulation regimes, as well as in the economic review of market concentration in regulated natural monopolies. |
| Keywords: | efficiency, quality of service, scale economies, input distance function, stochastic frontier analysis. |
| JEL: | L15 L51 L94 |
| Date: | 2005–09 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:0538&r=net |
| By: | Tooraj Jamasb; Michael Pollitt |
| Abstract: | Electricity reform has coincided with a significant decline in energy R&D activities. Technical progress is crucial for tackling many energy and environmental issues as well as for long-term efficiency improvement. This paper reviews the industrial organisation literature on innovation to explore the causes of this decline, and shows that it was predicted by the pre-reform literature. More recent evidence endorses this conclusion. At the same time, R&D productivity and innovative output appear to have improved in both electric utilities and equipment suppliers, in line with general improvements in the operating efficiency of the sector. Despite this, a lasting decline in basic R&D and innovation input into basic research may negatively affect development of radical technological innovation in the long run. There is a need for reorientation of energy technology policies and spending toward more basic research, engaging more firms in R&D, encouraging collaborative research, and exploring public private partnerships. |
| Keywords: | innovation, R&D expenditure, electricity reform, regulation, ownership |
| JEL: | L94 O38 |
| Date: | 2005–08 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:0533&r=net |
| By: | Yannis M. Ioannides |
| Abstract: | This review of current research on networks emphasizes three strands of the literature on social networks. The first strand is composed of models of endogenous network formation from both the economics and the computer science literature. The review highlights the sen- sitive dependence of the topology of endogenous networks on parameters of the behavioral models employed. The second strand draws from the recent econophysics literature in order to review the recent revival of interest in the random graph theory. This mathematical tool allows one to study social networks that result from uncoordinated random action of indi- viduals in setting up connections with others. The review explores a number of examples to assess the potential of recent research on random graphs with arbitrary degree distributions in accommodating more general behavioral motivations for social network formation. The third strand focuses on a specific model of social networks, Markov random graphs, that is quite central in the mathematical sociology and spatial statistics literatures but little known outside those literatures. These are random graphs where the events that different edges are present are dependent, if edges are incident to the same node, and independent, otherwise. The paper assesses the potential for economic applications with this particular tool. The paper concludes with an assessment of observable consequences of optimizing behavior in networks for the purpose of estimation. |
| Date: | 2005 |
| URL: | https://d.repec.org/n?u=RePEc:tuf:tuftec:0518&r=net |
| By: | Antoni Calvo-Armengol; Yannis M. Ioannides |
| Abstract: | Research in sociology and economics point to important role for social networks in labor markets. Social contacts mediate propagation of rich and reliable information among indi- viduals and thus help workers find jobs and employers find employees. Recent theoretical advances show that for agents connected through networks employment is positively cor- related across time and agents, unemployment exhibits duration dependence, and inequal- ity can persist. Recent empirical findings underscore nonlinearities in social interactions and potentially important effects of self-selection. Socioeconomic characteristics can explain substantial spatial dependence in unemployment. |
| Keywords: | networks, labor markets, social connections, unemployment, proximity, spatial dependence, information networks, neighborhoods and jobs |
| JEL: | D85 A14 J64 J31 J70 L14 |
| Date: | 2005 |
| URL: | https://d.repec.org/n?u=RePEc:tuf:tuftec:0517&r=net |
| By: | Christian Ghiglino (Queen Mary, University of London) |
| Abstract: | We propose a model of economic growth in which technological progress is modelled as an expanding random network of ideas. New ideas are created by combining successful old ideas. Old ideas are chosen according to their visibility as ideas, success as generators of innovations and age but the process is stochastic. The productivity of an innovation on the other hand depends on the number, importance and success of the neighbors to the parent idea. Within this framework, we isolate the conditions on the law governing the growth of the network compatible with balanced growth. The paper can be viewed as an attempt to provide microfoundations to the set of production functions compatible with the stylized facts of economic growth. |
| Keywords: | Economic growth, Technological progress, Innovations, Random growing network, Ideas, Scale-free distributions |
| JEL: | D30 D50 D90 O41 |
| Date: | 2005–09 |
| URL: | https://d.repec.org/n?u=RePEc:qmw:qmwecw:wp546&r=net |