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on Network Economics |
| By: | Campbell, Arthur; Leister, Matthew; Zenou, Yves |
| Abstract: | Because of its impacts on democracy, there is an important debate on whether the recent trends towards greater use of social media increases or decreases (political) polarization. One challenge for understanding this issue is how social media affects the equilibrium prevalence of different types of media content. We address this issue by developing a model of a social media network where there are two types of news content: mass-market (mainstream news) and niche-market (biased or more "extreme" news) and two different types of individuals who have a preference for recommending one or other type of content. We find that social media will amplify the prevalence of mass-market content and may result in it being the only type of content consumed. Further, we find that greater connectivity and homophily in the social media network will concurrently increase the prevalence of the niche market content and polarization. We then study an extension where there are two lobbying agents that can and wish to influence the prevalence of each type of content. We find that the lobbying agent in favor of the niche content will invest more in lobbying activities. We also show that lobbying activity will tend to increase polarization, and that this effect is greatest in settings where polarization would be small absent of lobbying activity. Finally, we allow individuals to choose the degree of homophily amongst their connections and demonstrate that niche-market individuals exhibit greater homophily than the mass-market ones, and contribute more to polarization. |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13860&r=all |
| By: | Costas Meghir; Ahmed Mushfiq Mobarak; Corina D. Mommaerts; Melanie Morten |
| Abstract: | Do new migration opportunities for rural households change the nature and extent of informal risk sharing? We experimentally document that randomly offering poor rural households subsidies to migrate leads to a 40% improvement in risk sharing in their villages. We explain this finding using a model of endogenous migration and risk sharing. When migration is risky, the network can facilitate migration by insuring that risk, which in turn crowds-in risk sharing when new migration opportunities arise. We estimate the model and find that welfare gains from migration subsidies are 42% larger, compared with the welfare gains without spillovers, once we account for the changes in risk sharing. Our analysis illustrates that (a) ignoring the spillover effects on the network gives an incomplete picture of the welfare effects of migration, and (b) informal risk sharing may be an essential determinant of the takeup of new income-generating technologies. |
| JEL: | D12 D52 J6 O12 R23 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26082&r=all |
| By: | Marchenko, Maria |
| Abstract: | Exam failures of the students in a specific network may influence not only the future performance of the student but also all students from their friendship networks, affecting the overall cohort's performance. Therefore, it is crucial to understand how the whole network responses to failure. The difficulty of such analysis is incorporated in the probability of the failures being highly endogenous. In this paper, I am applying the novel identification and estimation approach to deal with such endogeneity. I am exploring the dynamic data on the students' networks in HSE, Nizhniy Novgorod. The results suggest that, on average, the exam failure of the friend have a negative effect on future performance. |
| Keywords: | social networks, peer effects, exam failures, shock spillover |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wus005:7100&r=all |
| By: | Fajgelbaum, Pablo; Schaal, Edouard |
| Abstract: | We study optimal transport networks in spatial equilibrium. We develop a framework consisting of a neoclassical trade model with labor mobility in which locations are arranged on a graph. Goods must be shipped through linked locations, and transport costs depend on congestion and on the infrastructure in each link, giving rise to an optimal transport problem in general equilibrium. The optimal transport network is the solution to a social planner's problem of building infrastructure in each link. We provide conditions such that this problem is globally convex, guaranteeing its numerical tractability. We also study cases with increasing returns to transport technologies in which global convexity fails. We apply the framework to assess optimal investments and inefficiencies in observed road networks in European countries. |
| JEL: | F11 O18 R13 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13861&r=all |