Cursusbeschrijving / Course Description
zoals gepubliceerd op vu.nl / as published at vu.nl/en

All relevant information can be found in the course manual.

Course objective

Firms and consumers typically operate in various types of networks.These can be both physical networks (such as transport and communication networks) and non-physical networks (such as information networks). The main objective of this course is to give you a basic understanding of economic network theory, which enables you to  identify the relevance and consequences of networks for firms as well as for consumers.

After following this course, you:
- have a basic understanding of the fundamental economic principles underlying applied network theory;
- understand the role and behavior of various agents (government, consumers and firms) within network sectors;
- are able to understand the economic impacts that various forms of networks (i.e., transport networks, consumer networks, information networks, clustering of firms) have on the nature, size and behavior of firms;
- are able to determine optimal firm and consumer behavior conditional on the nature of the network;
- and have used applied network theory with (stylized) cases studies, in order to determine optimal firm or consumer behavior in combination with the nature of the network.

Course content

The economic principles behind networks and their consequences for both firms and consumers form the backbone of this course. The lectures specifically deal with the following topics:
- basic applied network theory;
- government interventions in network sectors;
- clustering and spill-over effects between firms;
- network sectors (e.g. telecom, transportation, energy);
- information and communication goods;
- switching costs and lock-in effects;
- network externalities.

In the working groups we will make use of the software package R, as it is capable of optimizing, analysing and plotting network structures (amongst many other things). A basic understanding of R is recommended but not necessary, as tutorials will be provided and working groups typically constitute of in-class hands-on assignments as well.

Form of tuition

Lectures and tutorials that concentrate on the application of network theory on stylized case studies.

Type of assessment

Written interim examination (75%) and assignments (25%)

Course reading

Compulsory

• Syllabus
  • Syllabus_Network_Economics.pdf
• Papers from professor Piet Rietveld
  
  • TIETENBERG ch05.pdf
  • Six reasons why Supply oriented indicators systematically overstimate service quality etc.pdf
  • bivec borders Transport.doc
• Papers on the economics of information technology
  • Varian.pdf
  • Farrell&Shapiro.pdf
• The fable of the keys
  • Liebowitz, S.J. and Margolis, S.E., The Fable of the Keys, Journal of Law & Economics, vol. 23, 1990 (http://www.utdallas.edu/~liebowit/keys1.html)
• The "new economy"
  • Robert J. Gordon, Does the “New Economy” Measure up to the Great Inventions from the Past?, Journal of Economic Perspectives, vol. 14, pp. 49-74, 2000

R (and other stoff) manual:

• Go to http://thomasdegraaff.nl/ResearchTools/ for the user guide of R. This always contains the latest version of the document. From the website you can download it as pdf or epub if needed. 

Entry requirements

Transport Economics and Management (or knowledge of microeconomics at a bachelor level)