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on Network Economics |
| By: | Andrei Hagiu (Harvard Business School, Strategy Unit); Hanna Halaburda (Bank of Canada) |
| Abstract: | We study the effect of different levels of information on two-sided platform profits?under monopoly and competition. One side (developers) is always informed about all prices and therefore forms responsive expectations. In contrast, we allow the other side (users) to be uninformed about prices charged to developers and to hold passive expectations. We show that platforms with more market power (monopoly) prefer facing more informed users. In contrast, platforms with less market power (i.e., facing more intense competition) have the opposite preference: they derive higher profits when users are less informed. The main reason is that price information leads user expectations to be more responsive and therefore amplifies the effect of price reductions. Platforms with more market power benefit because this leads to demand increases, which they are able to capture fully. Competing platforms are affected negatively because more information intensifies price competition. |
| Keywords: | two-sided platforms, information, responsive expectations, passive expectations, wary expectations |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:12-045&r=net |
| By: | Anna D'Annunzio (Universita' degli Studi di Roma "La Sapienza") |
| Abstract: | We study distribution and investment in content quality in a two-sided media market. We show that a content provider prefers to provide the premium content exclusively to a platform, no matter what the vertical structure of the industry is. However, a vertically integrated content provider has fewer incentives to invest in quality than an independent one. When downstream platforms are asymmetric, the platform with a competitive advantage on the advertising market gets the exclusive content and the content provider invests even less in quality when it is integrated with it. When we endogenize the vertical structure of the industry, we find that the content provider acquires the platform with a competitive advantage on the advertisers market. Vertical integration reduces both consumer surplus and total welfare. Our results suggest that, in merger control,authorities should carefully assess the effects of the integration on the incentives to invest in content quality. Moreover, a policy intervention at the distribution stage that enforces non-exclusive provision might have adverse effects on consumer surplus and welfare. Also advertising cap could have the effect of reducing quality. |
| Keywords: | exclusive contracts, premium content, investment, quality, media, twosided markets, vertical integration, merger, advertising cap |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:aeg:report:2013-16&r=net |
| By: | Hatzopoulos, V.; Iori, G.; Mantegna, R.; Micciche, S.; Tumminello, M. |
| Abstract: | Interbank markets allow credit institutions to exchange capital for purposes of liquidity management. These markets are among the most liquid markets in the financial system. However, liquidity of interbank markets dropped during the 2007-2008 financial crisis, and such a lack of liquidity influenced the entire economic system. In this paper, we analyze transaction data from the e-MID market which is the only electronic interbank market in the Euro Area and US, over a period of eleven years (1999-2009). We adapt a method developed to detect statistically validated links in a network, in order to reveal preferential trading in a directed network. Preferential trading between banks is detected by comparing empirically observed trading relationships with a null hypothesis that assumes random trading among banks doing a heterogeneous number of transactions. Preferential trading patterns are revealed at time windows of 3-maintenance periods. We show that preferential trading is observed throughout the whole period of analysis and that the number of preferential trading links does not show any significant trend in time, in spite of a decreasing trend in the number of pairs of banks making transactions. We observe that preferential trading connections typically involve large trading volumes. During the crisis, we also observe that transactions occurring between banks with a preferential connection occur at larger interest rates than the complement set - an effect that is not observed before the crisis. |
| Keywords: | Interbank markets; interbank rates; preferential links; statistically validated networks |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cty:dpaper:13/14&r=net |
| By: | Thomas Greve; Michael G. Pollitt |
| Abstract: | In most network asset procurement exercises, network configurations are predefined by the auctioneers. Bidders can neither propose different network configurations nor can they submit bids on a group of network links. We believe the market itself can be designed better. We present a lot structure and an auction design where bidders might propose and build different network configurations and where bidding for packages is a possibility. We demonstrate why the auction design in this paper should be considered for future network procurement exercises through an example, inspired by UK offshore electricity transmission assets, to illustrate our idea. |
| Keywords: | Auctions, Networks, Investments |
| JEL: | D44 D85 |
| Date: | 2013–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1347&r=net |
| By: | Kummer, Michael E. |
| Abstract: | Endogeneity in network formation hinders the identification of the role social networks play in generating spillovers, peer effects and other externalities. This paper tackles this problem and investigates how the link network between articles on the German Wikipedia influences the attention and content generation individual articles receive. Identification exploits local exogenous shocks on a small number of nodes in the network. It can thus avoid the usually required, but strong, assumptions of exogenous observed characteristics and link structure in networks. This approach also applies if, due to a lack of network information, identification through partial overlaps in the network structure fails (e.g. in classrooms). Exogenous variation is generated by natural and technical disasters or by articles being featured on the German Wikipedia's start page. The effects on neighboring pages are substantial; I observe an increase of almost 100 percent in terms of both views and content generation. The aggregate effect over all neighbors is also large: I find that a view on a treated article converts one for one into a view on a neighboring article. However, the resulting content generation is small in absolute terms. -- |
| Keywords: | Social Media,Information,Knowledge,Spillovers,Large-scale Networks,Natural Experiment |
| JEL: | L17 D62 D85 D29 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:13098&r=net |
| By: | Huang Vogel, Eleonore (CSIR, Blekinge Inst of Technology) |
| Abstract: | Academic Entrepreneurship has drawn large research interest over the last decade. However, few research focus on the processes behind entrepreneurial behavior in favor of more “linear” perspectives such as the individuals´ transformation from an academic to an entrepreneur measured by e.g. number of start-ups. This paper focuses on entrepreneurial opportunities, its nature and source, and speaks for the usefulness of a social network perspective on academic entrepreneurship. Inter-disciplinary literature is reviewed for research on the significance of social network to entrepreneurial behavior of academics, or more precisely; social networks significance to opportunity recognition, evaluation and exploitation among entrepreneurial academics. Academic entrepreneurial actions are viewed as non-isolated, non-deterministic, and dynamic co-creations through social networks. Finally concluding remarks, hypotheses and research ideas are presented in which the commercialization process may not be seen as a linear but dynamic process, the opportunity may be created or originate in new knowledge and in turn may be recognized by any member within the academic´s social network and that encouragement and various resources necessary for entrepreneurial action may be added by yet others within the network. |
| Keywords: | academic entrepreneurship; networks; opportunity recognition; innovation; co-creation |
| JEL: | I23 I24 L26 O31 |
| Date: | 2013–11–29 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bthcsi:2012-009&r=net |
| By: | Andersson, Martin (CIRCLE, Lund University, Sweden and Blekinge Institute of Technology); Larsson , Johan P. (Centre for Entrepreneurship and Spatial Economics (CEnSE), Department of Economics, Finance and Statistics, Jönköping International Business School (JIBS), Jönköping) |
| Abstract: | Entrepreneurial activity is significantly predicted by the presence of other entrepreneurs in the residential neighborhood. One plausible source of such spatial clustering is local peer effects, where individuals’ decisions to become entrepreneurs are influenced by entrepreneurial neighbors. Using geo-coded matched employer-employee data for Sweden, we find that sharing residential neighborhood with established entrepreneurs has a statistically significant and robust influence on the probability than an individual leaves employment for entrepreneurship. An otherwise average neighborhood with a 5 percentage point higher entrepreneurial intensity all else equal produces between 7 and 8 more entrepreneurs per square kilometer, each year. Local peer effects appear as important in explaining local clusters of entrepreneurs, and imply a local feedback-effect in which the presence of established entrepreneurs in a neighborhood breeds new local entrepreneurs |
| Keywords: | entrepreneurship; clusters; peer effects; local social interactions; role models; neighborhood; social network externalities; path dependence |
| JEL: | J24 L26 R12 R23 |
| Date: | 2013–11–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2013_030&r=net |