Reaction-Diffusion Processes on Interconnected Scale-Free Networks

We study the two particle annihilation reaction $A+B\rightarrow \emptyset$ on interconnected scale free networks, using different interconnecting strategies. We explore how the mixing of particles and the process evolution are influenced by the number of interconnecting links, by their functional properties, and by the interconnectivity strategies in use. We show that the reaction rates on this system are faster than what was observed in other topologies, due to the better particle mixing which suppresses the segregation effect, inline with previous studies performed on single scale free networks.Comment: 11 pages, 5 figure

The Network of Counterparty Risk: Analysing Correlations in OTC Derivatives

Counterparty risk denotes the risk that a party defaults in a bilateral contract. This risk not only depends on the two parties involved, but also on the risk from various other contracts each of these parties holds. In rather informal markets, such as the OTC (over-the-counter) derivative market, institutions only report their aggregated quarterly risk exposure, but no details about their counterparties. Hence, little is known about the diversification of counterparty risk. In this paper, we reconstruct the weighted and time-dependent network of counterparty risk in the OTC derivatives market of the United States between 1998 and 2012. To proxy unknown bilateral exposures, we first study the co-occurrence patterns of institutions based on their quarterly activity and ranking in the official report. The network obtained this way is further analysed by a weighted k-core decomposition, to reveal a core-periphery structure. This allows us to compare the activity-based ranking with a topology-based ranking, to identify the most important institutions and their mutual dependencies. We also analyse correlations in these activities, to show strong similarities in the behavior of the core institutions. Our analysis clearly demonstrates the clustering of counterparty risk in a small set of about a dozen US banks. This not only increases the default risk of the central institutions, but also the default risk of peripheral institutions which have contracts with the central ones. Hence, all institutions indirectly have to bear (part of) the counterparty risk of all others, which needs to be better reflected in the price of OTC derivatives.Comment: 36 pages, 18 figures, 2 table

The network structure of city-firm relations

How are economic activities linked to geographic locations? To answer this question, we use a data-driven approach that builds on the information about location, ownership and economic activities of the world's 3,000 largest firms and their almost one million subsidiaries. From this information we generate a bipartite network of cities linked to economic activities. Analysing the structure of this network, we find striking similarities with nested networks observed in ecology, where links represent mutualistic interactions between species. This motivates us to apply ecological indicators to identify the unbalanced deployment of economic activities. Such deployment can lead to an over-representation of specific economic sectors in a given city, and poses a significant thread for the city's future especially in times when the over-represented activities face economic uncertainties. If we compare our analysis with external rankings about the quality of life in a city, we find that the nested structure of the city-firm network also reflects such information about the quality of life, which can usually be assessed only via dedicated survey-based indicators.Comment: 12 pages, 4 figure

A network approach for the scientific collaboration in the European Framework Programs

We construct the networks of collaboration between partners for projects carried out with the support of European Commission Framework Programs FP5 and FP6. We analyze in detail these networks, not only in terms of total number of projects, but also for the different tools employed, the different geographical partitions, and the different thematic areas. For all cases we find a scale free behavior, as expected for such social networks, and also reported in the literature. In comparing FP5 to FP6, we show that despite a decrease in the number of signed contracts, and the total number of unique partners, there is an increase in the average number of collaborative partners per institution. Furthermore, we establish a measure for the central role (hub) for each country, by using the Minimum Spanning Tree (MST), which we construct in detail for each thematic area (e.g. Informatics, Nanoscience, Life Sciences, etc.). The importance of these network hubs is highlighted, as this information can be used by policy planners in designing future research plans regarding the distribution of available funds.Comment: 6 pages, 4 figure

The role of consumer networks in firms' multi-characteristics competition and market-share inequality

We develop a location analysis spatial model of firms' competition in multi-characteristics space, where consumers' opinions about the firms' products are distributed on multilayered networks. Firms do not compete on price but only on location upon the products' multi-characteristics space, and they aim to attract the maximum number of consumers. Boundedly rational consumers have distinct ideal points/tastes over the possible available firm locations but, crucially, they are affected by the opinions of their neighbors. Proposing a dynamic agent-based analysis on firms' location choice we characterize multi-dimensional product differentiation competition as adaptive learning by firms' managers and we argue that such a complex systems approach advances the analysis in alternative ways, beyond game-theoretic calculations.Comment: 33 pages, 5 figure