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on Network Economics |
| By: | Andreas Joseph; Irena Vodenska; Eugene Stanley; Guanrong Chen |
| Abstract: | The combination of the network theoretic approach with recently available abundant economic data leads to the development of novel analytic and computational tools for modelling and forecasting key economic indicators. The main idea is to introduce a topological component into the analysis, taking into account consistently all higher-order interactions. We present three basic methodologies to demonstrate different approaches to harness the resulting network gain. First, a multiple linear regression optimisation algorithm is used to generate a relational network between individual components of national balance of payment accounts. This model describes annual statistics with a high accuracy and delivers good forecasts for the majority of indicators. Second, an early-warning mechanism for global financial crises is presented, which combines network measures with standard economic indicators. From the analysis of the cross-border portfolio investment network of long-term debt securities, the proliferation of a wide range of over-the-counter-traded financial derivative products, such as credit default swaps, can be described in terms of gross-market values and notional outstanding amounts, which are associated with increased levels of market interdependence and systemic risk. Third, considering the flow-network of goods traded between G-20 economies, network statistics provide better proxies for key economic measures than conventional indicators. For example, it is shown that a country's gate-keeping potential, as a measure for local power, projects its annual change of GDP generally far better than the volume of its imports or exports. |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1403.0848&r=net |
| By: | Alessandro Avenali (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza"); Tiziana D'Alfonso (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza"); Claudio Leporelli (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza"); Giorgio Matteucci (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza"); Alberto Nastasi (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza"); Pierfrancesco Reverberi (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza") |
| Abstract: | We provide a general procedure to deal with the airport slot allocation problem, which applies the principles underlying the Administered Incentive Pricing model for regulation of radio spectrum in electronic communications markets. In particular, we propose an incentive pricing mechanism that generates an efficient slot allocation, where prices are built on a measure of the best use of each slot in serving end users. Incentive prices are set by considering the structure of the air transport network (and thus interdependencies among slots at different airports) in a given region, and the effect on both quantity and quality of passenger air transport in the region. Therefore, incentive prices should better align private and social decisions over the use of slots compared with pure market mechanisms (auctions and trading). |
| Keywords: | Airport slot allocation; Congestion; Administered incentive pricing; Market mechanisms |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:aeg:report:2014-3&r=net |
| By: | Anand, Kartik; Craig, Ben; von Peter, Goetz |
| Abstract: | The pattern of financial linkages is important in many areas of banking and finance. Yet bilateral linkages are often unknown, and maximum entropy serves as the leading method for estimating unobserved counterparty exposures. This paper proposes an efficient alternative that combines information-theoretic arguments with economic incentives to produce more realistic interbank networks that preserve important characteristics of the original interbank market. The method loads the most probable links with the largest exposures consistent with the total lending and borrowing of each bank, leading to networks with minimum density. When used in a stress testing context, the minimum density approach performs better than maximum entropy and also permits more robust analysis. Using the two benchmarks side by side helps identify a range of possible systemic risk outcomes when the true pattern of counterparty exposures is unknown. -- |
| Keywords: | interbank markets,networks,entropy,intermediation,systemic risk |
| JEL: | G21 L14 D85 C63 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdps:022014&r=net |
| By: | Llopis,Oscar; D’Este,Pablo |
| Abstract: | In this study, we analyze the determinants of biomedical scientists’ participation in various types of activities and outputs related to medical innovation. More specifically, we argue that scientists occupying brokerage positions among their contacts will in a more favorable position to deliver medical innovation outcomes, compared to scientists embedded in more dense networks. However, we also theorize that beyond a threshold, the coordination costs of brokerage may surpass its potential benefits. In addition to that, we study the influence of two individual-level attributes as potential determinants of the participation in medical innovation activities: cognitive breadth and perceived beneficiary impact. We situate our analysis within the context of the Spanish biomedical research framework, where we analyze a sample of 1,309 biomedical scientists. |
| Keywords: | Social Capital, Ego-Network Brokerage, Medical innovation, Translational Research, Perceived Beneficiary Impact, Cognitive Breadth |
| JEL: | D85 Z13 O31 |
| Date: | 2014–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:ing:wpaper:201402&r=net |
| By: | JOSÉ MARIA FERREIRA JARDIM DA SILVEIRA; MARIA ESTER DAL POZ; FABIO MASAGO |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:anp:en2012:155&r=net |
| By: | Xiaobing Feng; Woo Seong Jo; Beom Jun Kim |
| Abstract: | The weighted and directed network of countries based on the number of overseas banks is analyzed in terms of its fragility to the banking crisis of one country. We use two different models to describe transmission of shocks, one local and the other global. Depending on the original source of the crisis, the overall size of crisis impacts is found to differ country by country. For the two-step local spreading model, it is revealed that the scale of the first impact is determined by the out-strength, the total number of overseas branches of the country at the origin of the crisis, while the second impact becomes more serious if the in-strength at the origin is increased. For the global spreading model, some countries named "triggers" are found to play important roles in shock transmission, and the importance of the feed-forward-loop mechanism is pointed out. We also discuss practical policy implications of the present work. |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1403.1363&r=net |
| By: | PEDRO GARCIA DUARTE |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:anp:en2013:010&r=net |
| By: | Penélope Hernández (ERI-CES); Guillem Martínez-Canovas (ERI-CES); Manuel Muñoz-Herrera (University of Groningen); Lea Ellwardt (University of Groningen) |
| Abstract: | We examine the interplay between a person's individual preference and the social influence others exert. We provide a model of network relationships with conflicting preferences, where individuals are better off coordinating with those around them, but not all prefer the same action. We test our model in an experiment, varying the level of conflicting preferences between individuals. Our findings suggest that preferences are more salient than social influence, under conflicting preferences: subjects relate mainly with others who prefer the same. This leads to two undesirable outcomes: network segregation and social inefficiency. The same force that helps people individually hurts society. |
| Keywords: | Heterogeneity, Social Networks, Formation, Equilibrium selection |
| JEL: | C62 C72 D82 D85 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:dbe:wpaper:0114&r=net |
| By: | Michael D. König; Xiaodong Liu; Yves Zenou |
| Abstract: | We study a structural model of R&D alliance networks in which firms jointly form R&D collaborations to lower their production costs while competing on the product market. We derive the Nash equilibrium of this game, provide a welfare analysis and determine the optimal R&D subsidy program that maximizes total welfare. We also identify the key firms, i.e. the firms whose exit would reduce welfare the most. We then structurally estimate our model using a panel dataset of R&D collaborations and annual company reports. We use our estimates to identify the key firms and analyze the impact of R&D subsidy programs. Moreover, we analyze temporal changes in the rankings of key firms and how these changes affect the optimal R&D policy. |
| Keywords: | R&D networks, key firms, optimal subsidies |
| JEL: | D85 L24 O33 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:142&r=net |
| By: | Pawe{\l} Fiedor |
| Abstract: | The econophysics approach to socio-economic systems is based on the assumption of their complexity. Such assumption inevitably lead to another assumption, namely that underlying interconnections within socio-economic systems, particularly financial markets, are nonlinear, which is shown to be true even in mainstream economic literature. Thus it is surprising to see that network analysis of financial markets is based on linear correlation and its derivatives. An analysis based on partial correlation is of particular interest as it leading to the vicinity of causality detection in time series analysis. In this paper we generalise the Planar Maximally Filtered Graphs and Partial Correlation Planar Graphs to incorporate nonlinearity using partial mutual information. |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1403.2050&r=net |