A dynamic perspective: local interactions driving the spread of social networks

ABSTRACT

This study takes a micro standpoint to quantitatively verify the extent to which local interactions affect the expansion of dynamic social networks. By reviewing and synthesizing the theoretical literature in this article, we seek to establish a pragmatic analytical framework to capture the underlying functioning of local interactions. It then aims to produce findings on seven distinct marketing campaigns in which the real-world virtual communities offer intact time-series connections. In our considered cases, the firm-to-consumer interactivity plays a pivotal role in social media marketing while the customer-driven influence advances individual information transmission. The significant positive relationships demonstrate features of interactivity within subgroups including reciprocal edges and directed 3-cliques associated with the evolution of the virtual community by electronic word-of-mouth (WOM) of both firm-to-consumer and consumer-to-consumer interactions. More importantly, the attenuation of local interactions to a large extent leads to the cut-off point of the growth of the dynamic social network.     

Adding Value to Applied Policy Models： The Case of the WTO and OECD Support Classification Systems

Both the OECD and the WTO have accumulated systematic data on the magnitude of support going to farmers as a result of farm policies. The datasets are collected for different purposes, but both give a detailed picture of the evolution of these policies. This paper extends recent work on the compatibility or otherwise of the two attempts at policy monitoring by considering the categorization of individual policy instruments in Norway, Switzerland, the US, and the EU. The results show how the OECD dataset, particularly with respect to the link between direct payments and production requirements, complements that of the WTO. Many payments classified in the WTO Green Box require production, raising the possibility that they may distort production and trade. Though the issue of correct notifications to the WTO is the province of lawyers, the implications for modeling and policy analysis are of interest to economists, and the broader question of improving the consistency of the two datasets is of importance in the quest for transparency in the interpretation of changes in farm policies.     

The impact of environmental regulation on productivity in German industries

The objective of this paper is to adjust a traditional total factor productivity (TFP) measure for the direct effect of environmental regulation on material and capital input. For this purpose we consider the fact that part of material input and pollution abatement capital have not been used to increase output but to cover the cost of using the environment as a factor of production. Therefore TFP growth rates are lower if part of the material input is allocated to abatement activities instead of producing output. We propose to treat compliance with environmental regulation as an unproductive input linked to the use of productive material input. Our aim is to answer and discuss two questions: How to measure the effect of environmental regulation on TFP, and does the effect matter. We examine data from 1975–1991 for ten pollution intensive German industries.We would like to thank Cornelia Oßwald for valuable research assistance. We are especially grateful to two anonymous referees for many helpful comments.     

Price competition and market transparency: evidence from a random response technique

Surveys can increase market transparency when information asymmetries are present—but this will only happen when respondents answer questions truthfully. Sometimes, however, it might not be in the respondents’ best interest to provide truthful information on their firm or market. This will be especially true when other firms can exploit any information they provide. Understanding when, and under what conditions, respondents answer questions truthfully is important to researchers studying these markets and to policymakers using firm surveys to identify ways of improving the business environment. Using data from two countries in South Asia, this paper uses a random response technique to identify respondents that do not answer truthfully. We label these respondents as ‘reticent’. We show that respondents become more reticent when their firms face intense price competition. We argue that this is because intense competition gives respondents a greater incentive to misreport information to reduce market transparency.     

Consumer Ownership in Liberalized Electricity Markets. The Case of Denmark

The continuation of consumer ownership has been an important part of the Danish electricity reform from 1999. Consumer ownership refers to either a consumer co-operative or a municipal utility. Contrary to conventional wisdom, consumer ownership can be supported by solid arguments from modern economic theory of organization. These arguments are presented and confronted with both present and future situation in Denmark. The development of the electricity supply industry after the Second World War has emptied consumer ownership of much of its original content. Nowadays, most consumers consider their electric utility as the (monopoly) supplier of a good they demand and not as something they own. Therefore, obligatory consumer ownership as specified in the new Danish Electricity Act of 1999 cannot be relied on to guarantee security of supply and reasonable prices for small consumers     

The Impact of Institutional and Human Resource Distance on International Entry Strategies

'Distance' between organizational contexts has been a prime concern of scholarly research into international business strategies. We extend this research by exploring the complementary roles of institutional and human resource distances on foreign investors' entry strategies. Combining institutional and resource-based theories suggests that: (1) human resource differences complement institutional differences; (2) the effects of some aspects of distance are curvilinear; and (3) the impact of distance differs between first and subsequent entries. We find empirical support for these arguments on a unique dataset of foreign direct investment in six emerging economies that incorporates multiple host as well as multiple home countries.     

Agglomeration in an innovative and differentiated industry with heterogeneous knowledge spillovers

This paper introduces an agent-based simulation model to study the technological development, the economic performance of firms and the evolution of agglomerations in a differentiated industry. The analysis is based on the interaction and behavior of firms, which might share knowledge but at the same time are competitors on the goods markets. Firms do not only compete with quantities they can also introduce process and product innovations. The level of knowledge of a firm describes the capabilities to perform innovations. Knowledge can be accumulated by investing in R&D and by knowledge spillover, which depend on geographical and technological proximity. Simulation runs show that there is an incentive to agglomerate in young industries and that geographical proximity enhances innovation, especially the number of product innovations.      

Momentum crash,credit risk and optionality effects in bear markets and crisis periods: evidence from the US stock market

This study explores whether the credit risk anomaly exhibits option-like behaviour similar to the momentum anomaly. It finds that the inverted credit risk spread indeed displays option-like behaviour in bear market states. Unlike a momentum portfolio, which is effectively a short call option on the market, an inverted credit risk portfolio appears to be a long call option on the market.