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on Network Economics |
| By: | Nicholas Economides (Stern School of Business, New York University); Joacim Tåg (Swedish School of Economics and Business Administration, FDPE, and HECER); |
| Abstract: | We discuss the benefits of net neutrality regulation in the context of a two-sided market model in which platforms sell Internet access services to consumers and may set fees to content and applications providers “on the other side” of the Internet. When access is monopolized, we find that generally net neutrality regulation (that imposes zero fees “on the other side” of the market) increases total industry surplus compared to the fully private optimum at which the monopoly platform imposes positive fees on content and applications providers. Similarly, we find that imposing net neutrality in duopoly increases total surplus compared to duopoly competition between platforms that charge positive fees on content providers. We also discuss the incentives of duopolists to collude in setting the fees “on the other side” of the Internet while competing for Internet access customers. Additionally, we discuss how price and non-price discrimination strategies may be used once net neutrality is abolished. Finally, we discuss how the results generalize to other two-sided markets. |
| Keywords: | net neutrality, two-sided markets, Internet, monopoly, duopoly, regulation, discrimination |
| JEL: | L1 D4 L12 L13 C63 D42 D43 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0714&r=net |
| By: | Doh-Shin Jeon (Department of Economics and Business, Universitat Pompeu Fabra); Sjaak Hurkens (Institute for Economic Analysis); |
| Abstract: | We study a retail benchmarking approach to determine access prices for interconnected networks. Instead of considering fixed access charges as in the existing literature, we study access pricing rules that determine the access price that network i pays to network j as a linear function of the marginal costs and the retail prices set by both networks. In the case of competition in two-part tariffs, we consider a class of access pricing rules, similar to the optimal one under competition in linear prices, derived by Jeon (2005), but based on average retail prices. We show that firms choose the variable price equal to the marginal cost under the class of rules. Therefore, the regulator can choose one among the rules to pursue additional objectives such as consumer surplus, network coverage or investment: in particular, we show that the regulator can achieve static and dynamic efficiency at the same time. |
| Keywords: | Networks, Access Pricing, Interconnection, Competition Policy, Telecommunications, Investment, Two-part Tariff |
| JEL: | D4 K21 L41 L51 L96 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0711&r=net |
| By: | Sergio Currarini (Department of Economics, University Of Venice Cà Foscari and School for Advanced Studies in Venice); Paolo Pin (Abdus Salam International Center for Theoretical Physics, Trieste and University of Venice); Matthew O. Jackson (Department of Economics, Stanford University and the Santa Fe Institute.) |
| Abstract: | We develop a model of friendship formation that sheds light on segregation patterns observed in social and economic networks. Individuals come in different types and have type-dependent benefits from friendships; we examine the properties of a steady-state equilibrium of a matching process of friendship formation. We use the model to understand three empirical patterns of friendship formation: (i) larger groups tend to form more same-type ties and fewer other-type ties than small groups, (ii) larger groups form more ties per capita, and (iii) all groups are biased towards same-type relative to demographics, with the most extreme bias coming from middle-sized groups. We trace each of these empirical observations to specific properties of the theoretical model and highlight the role of choice and chance in generating homophilous behavior. Finally we discuss welfare implications of the model. |
| Keywords: | Networks, Homophily, Segregation, Friendships, Social Networks, Integration, Diversity, Minorities |
| JEL: | D85 A14 J15 J16 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:20_07&r=net |
| By: | Sergio Currarini (Department of Economics, University Of Venice Cà Foscari and School for Advanced Studies in Venice); Francesco Feri (University of Innsbruck) |
| Abstract: | We study the problem of information sharing in oligopoly, when sharing decisions are taken before the realization of private signals. Using the general model developed by Raith (1996), we show that if firms are allowed to make bilateral exclusive sharing agreements, then some degree of information sharing is consistent with equilibrium, and is a constant feature of equilibrium when the number of firms is not too small. Our result is to be contrasted with the traditional conclusion that no information is shared in common values situations with strategic substitutes - such as Cournot competition with demand shocks - when firms can only make industry-wide sharing contracts (e.g., a trade association). |
| Keywords: | Networks, Information sharing, oligopoly, networks, Bayesian equilibrium |
| JEL: | D43 D82 D85 L13 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:21_07&r=net |
| By: | Yongmin Chen (Department of Economics, University of Colorado at Boulder); Scott J. Savage (Department of Economics, University of Colorado at Boulder); |
| Abstract: | An important issue in economics is how market structure affects prices. While the standard view is that competition lowers prices, Chen and Riordan (2006) argued that with product differentiation it is not exceptional for prices to be higher under duopoly than monopoly. This paper empirically investigates one implication from Chen and Riordan, namely, that prices are lower under duopoly when consumer preferences for the two products are similar, and they are more likely to be higher under duopoly if consumer preferences for the two products are more diverse. Focusing on the price for cable modem Internet access, with or without competition from a digital subscriber line provider, and using education dispersion as a proxy for consumer preference diversity, we find empirical support for this implication. In markets where education dispersion is low, competition reduces prices. As education dispersion increases, the negative effect of competition on prices diminishes; and when the dispersion is high enough, competition increases prices. |
| Keywords: | competition, Internet, preference diversity, prices |
| JEL: | L1 L13 L96 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0713&r=net |
| By: | Cruijssen, F.C.A.M.; Borm, P.E.M.; Dullaert, W.; Hamers, H.J.M. (Tilburg University, Center for Economic Research) |
| Abstract: | This paper introduces a framework for joint hub network development. Building a joint physical hub for transhipment of goods is expensive and therefore involves considerable risks for the cooperating companies. In a practical setting, it is unlikely that an entire network will be built at once. Rather, the partners will have a more cautious attitude and build the hub facilities one-by-one. In the proposed framework, every time a new hub is introduced, partners will have the opportunity to decide whether or not they participate (and thus invest) in this network extension. The framework is also applicable in cooperative situations other than hub network development. In cases where multiple (infrastructural) investments have to be made by a consortium of logistics companies, the participants are likely to take advantage of a step-wise approach with gain sharing at intermediate steps. More specifically, the procedure can also benefit maintenance groups, warehouse sharing initiatives, and intermodal groups. |
| Keywords: | Hub Networks; Horizontal Cooperation; Cooperative Game Theory |
| JEL: | C61 C71 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200776&r=net |
| By: | Åse Gornitzka |
| Keywords: | networks; administrative adaptation; educational policy |
| Date: | 2007–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:erp:arenax:p0232&r=net |
| By: | Christian R. Østergaard |
| Abstract: | Knowledge spillovers from a university to the local industry play an important role in clusters, but we know little about these spillovers. This paper examines empirically the extent of university-industry informal contacts. Furthermore, it analyses the characteristics of an engineer that acquire knowledge from informal contacts with university researchers. The university-industry contacts are compared with results for interfirm contacts. The research shows that the interfirm informal contacts are more numerous than university informal contacts. Likewise, knowledge is more frequently acquired from other firms than through university-industry contacts. Engineers that have participated in formal projects with university researchers and engineers that are educated at the university have a higher likelihood of acquiring knowledge from informal contacts with university researchers. |
| Keywords: | Knowledge flows; informal contacts |
| JEL: | D83 O32 I23 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:aal:abbswp:07-19&r=net |
| By: | Silva, Maria José; Leitão, João |
| Abstract: | This paper aims to identify the nature of the relationships that are established amongst agents who co-operate in terms of innovation practices. It analyses whether the entrepreneurial innovation capability of firms is stimulated through the relationships developed with external partners. The data of 2nd Community Innovation Survey of EUROSTAT is used in a logistic model. In the estimation process of the Logit function, the entrepreneurial innovation capability is considered as the answer variable. The scientific agents who cooperate in terms of innovation activities impact, positively, on the propensity to engage in innovative advances revealed by the firms, at the level of product innovation. The paper presents policy implications, which may be used in the design of public policies for fostering open innovation networks between scientific agents and firms. |
| Keywords: | Innovation; Networks; Entrepreneurial Innovation Capability. |
| JEL: | O32 I28 O31 I23 |
| Date: | 2007–10–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:5215&r=net |