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on Network Economics |
| By: | Anandya, Dudi |
| Abstract: | The Internet has enabled people to connect to each other, regardless of time and space. This lead to a new phenomena, known as social networking through social network sites such Facebook, and Friendster. In social network sites members find new kinds of exchange, which is information exchange. Membership in many social network sites are free, which means that everyone is free to join or leave it. In that case social network providers must ensure that members keep using their site. Exchange has been known as subject matter in marketing. Exchange will lead to customer loyalty through value creation. This paper will show that exchange has direct impact to loyalty. The community based theory has been shown that if community members keep exchange activity, they will loyal to the community. The author will focus on friendship based communities such as Facebook. |
| Keywords: | Exchange; Value; Community; Social Network Site |
| JEL: | M3 |
| Date: | 2010–04–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:25277&r=net |
| By: | Franco Ruzzenenti; Diego Garlaschelli; Riccardo Basosi |
| Abstract: | We exploit the symmetry concepts developed in the companion review of this article to introduce a stochastic version of link reversal symmetry, which leads to an improved understanding of the reciprocity of directed networks. We apply our formalism to the international trade network and show that a strong embedding in economic space determines particular symmetries of the network, while the observed evolution of reciprocity is consistent with a symmetry breaking taking place in production space. Our results show that networks can be strongly affected by symmetry-breaking phenomena occurring in embedding spaces, and that stochastic network symmetries can successfully suggest, or rule out, possible underlying mechanisms. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1009.4489&r=net |
| By: | Boldron, François; Fève, Frédérique; Florens, Jean-Pierre; Panet-Amaro, C.; Valognes, C. |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:22907&r=net |
| By: | HERINGS, Jean - Jacques (Department of Economics, Maastricht University, 6200 MD Maastricht, The Netherlands); MAULEON, Ana (FNRS; CEREC, Facultés universitaires Saint-Louis, B-1000 Brussels, Belgium; Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium); VANNETELBOSCH, Vincent (FNRS and Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium) |
| Abstract: | A set of coalition structures P is farsightedly stable (i) if all possible deviations from any coalition structure p belonging to P to a coalition structure outside P are deterred by the threat of ending worse off or equally well off, (ii) if there exists a farsighted improving path from any coalition structure outside the set leading to some coalition structure in the set, and (iii) if there is no proper subset of P satisfying the first two conditions. A non-empty farsightedly stable set always exists. We provide a characterization of unique farsightedly stable sets of coalition structures and we study the relationship between farsighted stability and other concepts such as the largest consistent set and the von Neumann-Morgenstern farsightedly stable set. Finally, we illustrate our results by means of coalition formation games with positive spillovers. |
| Keywords: | coalition formation, farsighted players, stability |
| Date: | 2010–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2010022&r=net |
| By: | Maggie Xiaoyang Chen (Department of Economics/Institute for International Economic Policy, George Washington University); Sumit Joshi (Department of Economics, George Washington University) |
| Abstract: | The recent proliferation of free trade agreements (FTAs) has resulted in an in- creasingly complex network of preferential trading relationships. The economics literature has generally examined the formation of FTAs as a function of the par- ticipating countries' economic characteristics alone. In this paper, we show both theoretically and empirically that the decision to enter into an FTA is also crucially dependent on the participating countries' existing FTA relationships with third countries. Accounting for the interdependence of FTAs helps to explain a significant fraction of FTA formations that would not otherwise be predicted by countries' economic characteristics. |
| Keywords: | free trade agreements, third-country e§ect, loss sharing, concession erosion |
| JEL: | F15 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:gwi:wpaper:2008-16&r=net |
| By: | Bardey, David; Bourgeon, Jean Marc |
| Abstract: | We develop a model in which two insurers and two health care providers compete for a fixed mass of policyholders. Insurers compete in premium and offer coverage against financial consequences of health risk. They have the possibility to sign agreements with providers to establish a health care network. Providers, partially altruistic, are horizontally differentiated with respect to their physical address. They choose the health care quality and compete in price. First, we show that policyholders are better off under a competition between conventional insurance rather than under a competition between integrated insurers (Managed Care Organizations). Second, we reveal that the competition between a conventional insurer and a Managed Care Organization (MCO) leads to a similar equilibrium than the competition between two MCOs characterized by a different objective i.e. private versus mutual. Third, we point out that the ex ante providers' horizontal differentiation leads to an exclusionary equilibrium in which both insurers select one distinct provider. This result is in sharp contrast with frameworks that introduce the concept of option value to model the (ex post) horizontal differentiation between providers. |
| Keywords: | Health care network; horizontal differentiation; health care quality |
| JEL: | I11 L11 L14 L42 |
| Date: | 2010–08–11 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:23112&r=net |
| By: | David Bardey; Jean-Marc Bourgeon |
| Abstract: | We develop a model in which two insurers and two health care providers compete for a fixed mass of policyholders. Insurers compete in premium and offer coverage against financial consequences of health risk. They have the possibility to sign agreements with providers to establish a health care network. Providers, partially altruistic, are horizontally differentiated with respect to their physical address. They choose the health care quality and compete in price. First, we show that policyholders are better off under a competition between conventional insurance rather than under a competition between integrated insurers (Managed Care Organizations). Second, we reveal that the competition between a conventional insurer and a Managed Care Organization (MCO) leads to a similar equilibrium than the competition between two MCOs characterized by a different objective i.e. private versus mutual. Third, we point out that the ex ante providers' horizontal differentiation leads to an exclusionary equilibrium in which both insurers select one distinct provider. This result is in sharp contrast with frameworks that introduce the concept of option value to model the (ex post) horizontal differentiation between providers. |
| Date: | 2010–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:col:000092:007457&r=net |
| By: | Jamasb, T.; Orea, L.; Pollitt, M.G. |
| Abstract: | Incentive regulation and efficiency analysis of network utilities often need to take the effect of important external factors, such as the weather conditions, into account. This paper presents a method for estimating the effect of weather conditions on the costs of electricity distribution networks using parametric techniques. It examines whether the use of popular statistical variable reduction techniques is conceptually and econometrically sound for analyzing the effect of weather on the network costs. In this paper we estimate cost functions with the whole set of weather variables, identifying, when necessary, a subset of variables that can accurately reflect the effects of weather conditions. We show that weather conditions significantly affect distribution costs and the absence of weather variables has a downward biased impact on the effect of quality on costs. Also, the performance of statistical weather composites to capture this effect is poor. Finally, we show that there is a distinction between the effects of persistent and time varying weather conditions. |
| Keywords: | Electricity distribution cost, separability, weather composites, instrumental variable estimator |
| JEL: | L15 L51 L94 |
| Date: | 2010–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1042&r=net |
| By: | Giovanni Mastrobuoni; Eleonora Patacchini |
| Abstract: | Using unique data on criminal profiles of 800 US Mafia members active in the 50s and 60s and on their connections within the Cosa Nostra network we analyze how the geometry of criminal ties between mobsters depends on family ties, community roots and ties, legal and illegal activities. We contrast our evidence with historical and sociological views about the functioning of the Mafia. Much of our findings are remarkably in line with these views, with interesting qualifications. We interpret some of our results in light of a model of optimal vertical and horizontal connections where more connections mean more profits but also a higher risk of defection. We find that variables that lower the risk of defection, among others, kinship, violence, and mafia culture increase the number of connections. Moreover, there is evidence of strategic endogamy: female children are as valuable as male ones, and being married to a "connected" wife is a strong predictor of leadership within the Mafia ranks. A very parsimonious regression model explains one third of the variability in the criminal ranking of the "men of honor," suggesting that these variables could be used to detect criminal leaders. An additional prediction of our simple model is a right-skewed distribution of the number of connections, which is remarkably in line with the evidence of an extremely hierarchical organization. |
| Keywords: | Mafia; Networks; Intermarriage; Assortative Matching; Crime |
| JEL: | A14 C21 D23 D85 K42 Z13 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:152&r=net |
| By: | Blandine LAPERCHE |
| Abstract: | The networked enterprise simultaneously seeks to develop new knowledge in order to be able to compete on international markets thanks to its innovation capacity and to improve its process of allocation of resources, notably by reducing its production and organisational costs. In this paper, we study the functions of intellectual property rights in these productive and organisational objectives of the networked enterprise. Intellectual property rights are usually studied in relation to their incentive/defensive and offensive roles. But do they play a role in the organisation and notably in the coordination of activities within the networked enterprise? We consider that they have an important ‘coordination function’, making easier the relationships between all the fragmented parts of the networked enterprise. This coordination role is moreover gaining ground in the context of collaborative innovation (innovation networks). It is thus associated to the ‘incentive/defensive function’ of IPRs, aiming at protecting and thus giving incentives to the constitution of the firm’s innovation potential, called here ‘knowledge capital’. This coordination function is also associated to the ‘offensive one’, relying on the construction and the reinforcement of entry barriers which largely contribute to define the position of the networked enterprise within the innovation network to which it usually belongs. The paper concludes by stressing the relationship between the functions of IPRs in networked enterprises and the extension and strengthening of IPRs at the global leve |
| Keywords: | intellectual property rights, networked enterprise, growth, coordination, innovation network |
| JEL: | Q55 D23 D85 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:rii:rridoc:11&r=net |
| By: | van der Weijde, A.H.; Hobbs, B.F. |
| Abstract: | We formulate a series of stochastic models for committing and dispatching electric generators subject to transmission limits. The models are used to estimate the benefits of electricity locational marginal pricing (LMP) that arise from better coordination of day-ahead commitment decisions and real-time balancing markets in adjacent power markets when there is significant uncertainty in demand and wind forecasts. The unit commitment models optimise schedules under either the full set of network constraints or a simplified net transfer capacity (NTC) constraint, considering the range of possible real-time wind and load scenarios. The NTC-constrained model represents the present approach for limiting day-ahead electricity trade in Europe. A subsequent redispatch model then creates feasible real-time schedules. Benefits of LMP arise from decreases in expected start-up and variable generation costs resulting from consistent consideration of the full set of network constraints both day-ahead and in real-time. Meanwhile, using LMP to coordinate adjacent balancing markets provides benefits because it allows intermarket flow schedules to be adjusted in real-time in response to changing conditions. These models are applied to a stylised four-node network, examining the effects of varying system characteristics on the magnitude of the locational-based unit commitment benefits and the benefits of intermarket balancing. Although previous www.eprg.group.cam.ac.uk EPRG WORKING PAPER studies have examined the benefits of LMP, these usually examine one specific system, often without a discussion of the sources of these benefits, and with simplifying assumptions about unit commitment. <br><br>We conclude that both categories of benefits are situation dependent, such that small parameter changes can lead to large changes in expected benefits. Although both can amount to a significant percentage of operating costs, we find that the benefits of balancing market coordination are generally larger than the unit commitment benefits. |
| Keywords: | Electricity prices, international electricity exchange, electricity market model, electricity transmission |
| JEL: | L94 |
| Date: | 2010–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1044&r=net |
| By: | Ana Espinola-Arredondo; Felix Munoz-Garcia (School of Economic Sciences, Washington State University) |
| Abstract: | This paper examines the two externalities that a country's environmental regulation imposes on other country's welfare: an environmental externality, due to transboundary pollution, and a competitive advantage externality, as regulations affect domestic firms' abatement costs, which impact the profits of their foreign competitors. We first analyze the emission standards that countries independently set under different market structures and then compare them with the standards set under international environmental agreements that internalize one or both types of externalities. The paper hence disentangles the effect of each externality. We show that firms’ profits increase when countries participate in international treaties if the environmental damage from pollution is relatively low and such pollution is not significantly transboundary. We hence demonstrate that international environmental agreements can serve as cooperative devices firms use to ameliorate overproduction and increase profits, without the need to form collusive agreements. |
| Keywords: | Transboundary pollution, strategic environmental policy, international environmental agreement, market structure |
| JEL: | C72 F12 H23 Q28 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:wsu:wpaper:munoz-5&r=net |