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on Network Economics |
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Issue of 2018‒09‒24
six papers chosen by Pedro CL Souza Pontifícia Universidade Católica do Rio de Janeiro |
| By: | Johannes Boehm (Princeton University); Jan Sonntag (Sciences Po Paris) |
| Abstract: | This paper studies the prevalence of market foreclosure using a novel dataset on U.S. and international buyer-seller relationships, and across a large range of industries. We find that relationships are more likely to break when suppliers vertically integrate with one of the buyers' competitors than when they vertically integrate with an unrelated firm. We establish causality using the prevalence of past vertical integration among related parties as an instrument. Foreclosure is more prevalent when suppliers have more market power. Furthermore, we find a substantial drop in performance among foreclosed firms. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:677&r=net |
| By: | Ilse Lindenlaub (Yale University); Anja Prummer (Queen Mary University of London) |
| Abstract: | This paper documents gender differences in social ties and develops a theory that links them to disparities in men's and women's labor market performance. Men's networks lead to better access to information, women's to higher peer pressure. Both affect effort in a model of teams, each beneficial in different environments. We find that information is particularly valuable under high uncertainty, whereas peer pressure is more valuable in the opposite case. We therefore expect men to outperform women in jobs that are characterized by high earnings uncertainty, such as the financial sector or film industry - in line with the evidence. |
| Keywords: | Networks, Peer pressure, Gender, Labor market outcomes |
| JEL: | J15 Z10 D02 |
| Date: | 2016–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:807&r=net |
| By: | Thomas Groll (Columbia University); Anja Prummer (Queen Mary University of London) |
| Abstract: | We study lobbying in a setting in which decision-makers share resources in a network. Two opposing interest groups choose which decision-maker they want to target with their resource provision, and their decision depends on the decision-makers' ideologies as well as the network structure. We characterize the lobbying strategies in various network settings and show that a higher resource flow as well as homophily reinforce decision-makers' ideological bias. We highlight that competing lobbyists' efforts do not neutralize each other and their payoffs and competitive advantages depend on the networks they face. Our findings are consistent with empirically established lobbying activities. |
| Keywords: | Networks, Lobbying, Targeting, Flow of resources, Ideology, Centrality, Homophily, Colonel Blotto, Externalities |
| JEL: | D72 D78 D83 D85 |
| Date: | 2016–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:808&r=net |
| By: | Anja Prummer (Queen Mary University of London) |
| Abstract: | This paper characterizes the optimal advertising strategy of candidates in an election campaign, where groups of heterogeneous voters are targeted through media outlets. We discuss its effects on the implemented policy and relate it to the well-documented increase in polarization. Additionally, we empirically establish that polarization displays electoral cycles. These cycles emerge in the model as candidates find it optimal to cater to different groups of voters and thus to adjust policies. Further, technologies that allow targeting voters more precisely tend to increase polarization. Our prediction is confirmed empirically as an increase in internet penetration leads to higher polarization. |
| Keywords: | Targeting, Media, Networks, Voting |
| JEL: | D85 D72 D83 |
| Date: | 2016–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:805&r=net |
| By: | Dai, R.; Mookherjee, D.; Munshi, K.; Zhang, X. |
| Abstract: | This paper identifies and quantifies the role played by birth-county-based community networks in the growth of private enterprise in China. We develop a network-based model that generates predictions for the dynamics of firm entry, concentration, and firm size across birth counties with varying social connectedness (measured by population density). These predictions are verified over the 1990-2009 period with administrative data covering the universe of registered firms. Competing non-network-based explanations can explain some, but not all, of the results. Moreover, supplementary evidence indicates that network spillovers occur within the birth county and, going down even further, within clans within the county. Having validated the model, we estimate its structural parameters and conduct counter-factual simulations, which estimate that entry over the 1995-2004 period would have been 40% lower (with a comparable decline in the stock of capital) in the absence of community networks. Additional counter-factual simulations shed light on misallocation and industrial policy in economies where networks are active. |
| Keywords: | Community Networks, Entrepreneurship, Misallocation, Institutions, Growth and Development. |
| JEL: | J12 J16 D31 I3 |
| Date: | 2018–09–11 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1850&r=net |
| By: | Batchimeg Sambalaibat (Indiana University) |
| Abstract: | OTC markets exhibit a core-periphery network: 10-30 central dealers trade frequently and with many dealers, while hundreds of peripheral dealers trade sparsely and with few dealers. Existing work rationalize this phenomenon with exogenous dealer heterogeneity. We build a search-based model of network formation and propose that a core-periphery network arises from specialization. Dealers endogenously specialize in different clients with different liquidity needs. The clientele difference across dealers, in turn, generates dealer heterogeneity and the core-periphery network: The dealers specializing in clients who trade frequently form the core, while the dealers specializing in buy-and-hold investors form the periphery. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:1278&r=net |