Simone Moriconi, Giovanni Peri, Dario Pozzoli, 24 February 2019

Firms’ offshoring decisions depend on the size of entry costs in target countries. But the institutional and policy determinants of these costs have received little empirical attention. This column uses data on 2,000 Danish manufacturing firms to explore how costs of entry affect offshoring decisions. Higher levels of labour market rigidity, credit risk, and corruption all lower the probability of offshoring to a given country, while immigrant networks within the firm increase the likelihood of offshoring to their home countries. 

Guangyu Cao, Ginger Jin, Xi Weng, Li-An Zhou, 09 November 2018

Positive network effects may lead to winner-takes-all in some markets. The column analyses dockless bike-sharing in China to show instead how an incumbent can benefit from positive spillovers from a competitor’s entry. In the case of bike-sharing, consumers multi-home, the market exhibits positive network effects, and investment by two firms is more cost-efficient than investment by one. 

Lin William Cong, Ye Li, Neng Wang, 05 October 2018

Cryptocurrencies, tokens, and the blockchain technology upon which these platforms are built hold considerable potential for financial architectures. This column presents a dynamic asset valuation model of cryptocurrencies and tokens on blockchain-based platforms. Price dynamics in the model feature explosive growth of the user base after an initial period of dormant adoption, accompanied by a run-up of token price volatility, in line with existing evidence. The findings highlight how the value of the tokens depends on user base, the quality of the blockchain platform, and users’ expectations of future token price dynamics. 

William C. Boning, John Guyton, Ronald Hodge, Joel Slemrod, Ugo Troiano, 25 May 2018

Tax evasion remains a pervasive problem. Fighting it efficiently is crucial, as resources spent on enforcement can’t be spent elsewhere in society. This column describes the outcomes of an enforcement experiment targeting at-risk firms in the US. Notification of risk status by letter saw an increase in remittances of 34%, while notification by in-person visit increased remittances by 276%. Remitted taxes also increased for the network neighbours of firms that received an in-person visit.

Giacomo De Giorgi, Anders Frederiksen, Luigi Pistaferri, 17 September 2016

Household consumption can be influenced by the consumption behaviour of peers. This column examines why this is the case, and considers some policy implications. The tendency for individuals to under-save (or over-borrow) in an attempt to ‘keep up with the Joneses’ appears to be driven by the average consumption of their peers, rather than by the consumption of conspicuous items. If tax policy fails to consider these peer effects, it risks wrongly estimating the effects of tax reforms that target certain groups.

Matthew Lindquist, Jan Sauermann, Yves Zenou, 10 December 2015

There is growing evidence that worker productivity is contagious. This column examines the impact of co-worker networks on productivity using tools from network economics. There are indeed strong network effects in worker productivity, with increases in the productivity of an individual’s co-worker network leading to an increase in the individual’s productivity. Also, exposure to trained workers increases the productivity of non-trained workers. The findings have implications for the optimal structure of co-worker networks within firms.

Xiaodong Liu, Eleonora Patacchini , Edoardo Rainone, 28 January 2014

Sleep is a key determinant of educational attainment among young adults, and carries with it longstanding health implications. This column provides evidence of network effects in adolescent sleeping decisions using a novel econometric approach. Young adults respond to the sleeping behaviour of their peer group, holding constant other observables. This compounding effect suggests a group approach to solving behavioural problems associated with sleep deprivation.

Richard Baldwin, 20 January 2014

The global value chain revolution has changed trade and trade agreements. Trade now matters for making goods as well as selling them. Trade governance has shifted away from the WTO towards megaregional agreements. This column argues that 21st-century regionalism is not fundamentally about discrimination, and that its benefits and costs are best thought of as network externalities and harmonisation costs respectively. More research is needed to determine how the megaregional trade agreements across the Pacific and Atlantic will fit with the WTO.


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