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on Network Economics |
| By: | Mariya Teteryatnikova; James Tremewan |
| Abstract: | We run a novel network formation experiment with a stream of payos and relatively unstructured link formation process, and test the performance of a number of theoretical stability concepts in this environment. We focus especially on the issue of myopic versus farsighted behaviour in network formation. A subtle treatment variation demonstrates clearly the power of myopic stability concepts in identifying the most stable networks. However, we also nd support for farsighted concepts of stability, especially those that assume players are pessimistic about the eventual outcome of a deviation. |
| JEL: | A14 C71 C92 D85 |
| Date: | 2015–07 |
| URL: | https://d.repec.org/n?u=RePEc:vie:viennp:1508&r=net |
| By: | Arun Advani (Institute for Fiscal Studies); Bansi Malde (Institute for Fiscal Studies) |
| Abstract: | In many contexts we may be interested in understanding whether direct connections between agents, such as declared friendships in a classroom or family links in a rural village, affect their outcomes. In this paper we review the literature studying econometric methods for the analysis of social networks. We begin by providing a common framework for models of social effects, a class that includes the `linear-in-means' local average model, the local aggregate model, and models where network statistics affect outcomes. We discuss identification of these models using both observational and experimental/quasi-experimental data. We then discuss models of network formation, drawing on a range of literatures to cover purely predictive models, reduced form models, and structural models, including those with a strategic element. Finally we discuss how one might collect data on networks, and the measurement error issues caused by sampling of networks, as well as measurement error more broadly. |
| Keywords: | Networks, Social Effects, Peer Effects, Econometrics, Endogeneity, Measurement Error, Sampling Design |
| Date: | 2014–12 |
| URL: | https://d.repec.org/n?u=RePEc:ifs:ifsewp:14/34&r=net |
| By: | Yann Bramoullé (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS); Rachel Kranton (Duke University) |
| Abstract: | This chapter studies games played on fixed networks. These games capture a wide variety of economic settings including local public goods, peer effects, and technology adoption. We establish a common analytical framework to study a wide game class. We unearth new connections between games in the literature and in particular between those with binary actions, like coordination and best-shot games, and those with continuous actions and linear best replies. We review and advance existing results by showing how they tie together within the common framework. We discuss the game-theoretic underpinnings of key notions including Bonacich centrality, maximal independent sets, and the lowest and largest eigenvalue. We study the interplay of individual heterogeneity and the network and we develop a new notion - interdependence - to analyze how a shock to one agent affects the action of another agent. We outline directions for future research. |
| Keywords: | Network Games, fixed networks, peer effects, coordination, interdependence |
| Date: | 2015–03 |
| URL: | https://d.repec.org/n?u=RePEc:aim:wpaimx:1530&r=net |
| By: | Bernard Herskovic (New York University) |
| Abstract: | This paper studies asset pricing in a multisector model in which sectors are connected to each other through an input-output network. Changes in the structure of the network are sources of systematic risk reflected in equilibrium asset prices. There are two key characteristics of the network that matter for asset prices: network concentration and network sparsity. Network concentration measures the degree to which equilibrium output is dominated by few large sectors while network sparsity measures the average input specialization of the economy. Furthermore, these two production-based asset pricing factors are determined by the structure of the network of production and can be computed from input-output data. By sorting stocks based on their exposure to the network factors, I find a return spread of 6% per year on portfolios sorted on sparsity-beta and ~4% per year on portfolios sorted on concentration-beta. These return gaps cannot be explained by standard asset pricing models such as the CAPM or the Fama French three-factor model. A calibrated model matches the network factor betas and return spreads alongside other asset pricing moments. |
| Date: | 2015 |
| URL: | https://d.repec.org/n?u=RePEc:red:sed015:378&r=net |
| By: | Christian Longhi (Université Nice Sophia Antipolis; GREDEG-CNRS) |
| Abstract: | Since the development of the knowledge based economies, clusters and clusters policies have been the subject of increased interest, as sources of knowledge, innovation, and competitiveness. The paper focuses on a case study drawn from the French cluster policy, the pole of competitiveness 'Secure Communicating Solutions' in the French Provence-Alpes-Côte d'Azur Region, based on two high tech clusters, Rousset - Gémenos and Sophia-Antipolis. The policy aims to provide the firms incentives to build network relations of heterogeneous actors to trigger innovative processes. The analysis of the collaborative R&D projects of the pole provides insights on the nature of the collective learning networks working in the clusters as well as the prevailing organizational forms resulting from the firms strategies. It show that knowledge spillovers are not simply "in the air" but very specific of the learning networks and clusters from which they belong. Clusters thus need to be analyzed jointly with networks in order to understand the processes underlying their innovation capacity. |
| Keywords: | Collective Learning Networks, Knowledge, Innovation, Clusters, Cluster Policy, Social Network Analysis |
| JEL: | L14 L38 O31 R11 |
| Date: | 2015–08 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2015-28&r=net |
| By: | Yukiko Saito (RIEITI); Andreas Moxnes (Dartmouth College); Andrew Bernard (Dartmouth College) |
| Abstract: | This paper examines the importance of buyer-supplier relationships, geography and the structure of the production network in firm performance. We develop a simple model where firms can outsource tasks and search for suppliers in different locations. Firms located in close proximity to other markets, and firms that face low search costs, will search more and find better suppliers. This in turn drives down the firm's marginal production costs. We test the theory by exploiting the opening of a high-speed (Shinkansen) train line in Japan which lowered the cost of passenger travel but left shipping costs unchanged. Using an exhaustive dataset on firms' buyer-seller linkages, we find significant improvements in firm performance as well as creation of new buyer-seller links, consistent with the model. |
| Date: | 2015 |
| URL: | https://d.repec.org/n?u=RePEc:red:sed015:311&r=net |
| By: | Ãureo de Paula (Institute for Fiscal Studies and University College London); Seth Richards-Shubik (Institute for Fiscal Studies); Elie Tamer (Institute for Fiscal Studies and Northwestern University) |
| Abstract: | This paper provides a framework for identifying preferences in a large network under the assumption of pairwise stability of network links. Network data present difficulties for identification, especially when links between nodes in a network can be interdependent: e.g., where indirect connections matter. Given a preference specification, we use the observed proportions of various possible payoff-relevant local network structures to learn about the underlying parameters. We show how one can map the observed proportions of these local structures to sets of parameters that are consistent with the model and the data. Our main result provides necessary conditions for parameters to belong to the identified set, and this result holds for a wide class of models. We also provide sufficient conditions - and hence a characterization of the identified set - for two empirically relevant classes of specifications. An interesting feature of our approach is the use of the economic model under pairwise stability as a vehicle for effective dimension reduction. The paper then provides a quadratic programming algorithm that can be used to construct the identified sets. This algorithm is illustrated with a pair of simulation exercises. |
| Date: | 2015–06 |
| URL: | https://d.repec.org/n?u=RePEc:ifs:cemmap:29/15&r=net |
| By: | Briglauer, Wolfgang; Gugler, Klaus; Haxhimusa, Adhurim |
| Abstract: | This paper employs firm-level panel data of 57 incumbent and entrant firms for 23 European countries in the decade from 2003 to 2012. We examine the impact of service- and facility-based competition on firm-level investment as well as the strategic effects underlying infrastructure investment decisions. At the same time we explicitly model the structural dynamics of broadband investment by means of a flexible accelerator model. The empirical specification employs dynamic panel estimation techniques which allows us to account for various sources of endogeneity. We find that facility-based competition exerts a positive and significant impact on both incumbents and entrants implying that incumbents' and entrants' investment decisions are strategic complements. Moreover, we find that intermodal competition in terms of fixed-mobile substitution exerts different effects at the firm level. Finally, we show that service-based competition appears to have no significant impact on the investment decision of incumbents and entrants. However, with respect to the later phase of market liberalization, service-based competition exerts a negative impact on entrants' investment. Our results thus also provide relevant policy guidance on the role of service-based competition in regulating emerging high-speed broadband infrastructure. |
| Keywords: | investment dynamics,regulation,service-based competition,facility-based competition,strategic effects |
| JEL: | L43 L52 L96 |
| Date: | 2015 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:15048&r=net |
| By: | Xinying Fu (VU University Amsterdam, the Netherlands); Vincent van den Berg (VU University Amsterdam, the Netherlands); Erik T. Verhoef (VU University Amsterdam, the Netherlands) |
| Abstract: | There has been wide interest in private supply of roads as a solution to traffic congestion. We study its efficiency under demand uncertainty: we solve for equilibrium and optimum as benchmarks, and evaluate the efficiency of possible regulatory policies for private road operators. We obtain analytic solutions for simple networks and numerical simulation results for more complex ones. For two serial links and two parallel links, self-financing still holds in expected terms for the first-best case, even though the capacity is higher than the capacity for the deterministic demand equal to the expected value. When forced to apply the second-best optimal pricing, the private supplier makes an expected loss (profit) if there is an untolled substitute (complement) in the network. In contrast to the deterministic counterpart of the problem we study, regulation by competitiv e auction cannot replicate the second-best zero-profit result. For more complex networks, when private firms adds capacity one link at a time, entry by competitive auctions performs better than free entry. For the parameter range considered in the numerical simulation, entry by generalized auction performs better than entry by patronage auction. |
| Keywords: | Traffic Congestion; Road Pricing; Uncertain Demand; Road Network; Private Supply; Auction |
| JEL: | D63 H23 R41 R42 |
| Date: | 2015–08–03 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20150092&r=net |
| By: | Fabio Sabatini; Francesco Sarracino |
| Abstract: | Online social networks such as Facebook disclose an unprecedented volume of personal information amplifying the occasions for social comparisons. We test the hypothesis that the use of social networking sites (SNS) increases people's dissatisfaction with their income. After addressing endogeneity issues, our results suggest that SNS users have a higher probability to compare their achievements with those of others. This effect seems stronger than the one exerted by TV watching, it is particularly strong for younger people, and it affects men and women in a similar way. |
| Date: | 2015–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:1507.08863&r=net |
| By: | Strobel, Michael |
| Keywords: | Agricultural and Food Policy, Teaching/Communication/Extension/Profession, |
| Date: | 2015–02–20 |
| URL: | https://d.repec.org/n?u=RePEc:ags:usao15:205042&r=net |
| By: | Sharon Barnhardt; Erica Field; Rohini Pande |
| Abstract: | A housing lottery in an Indian city provided winning slum dwellers the opportunity to move into improved housing on the city’s periphery. Fourteen years later, relative to lottery losers, winners report improved housing farther from the city center, but no change in family income or human capital. Winners also report increased isolation from family and caste networks and lower access to informal insurance. We observe significant program exit: 34% of winners never moved into the subsidized housing and 32% eventually exited. Our results point to the importance of considering social networks when designing housing programs for the poor. |
| JEL: | C93 H42 O12 |
| Date: | 2015–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:21419&r=net |