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Productivity Growth and Pecuniary Knowledge Externalities: An Empirical Analysis of Agglomeration Economies in European Regions

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  • Cristiano Antonelli
  • Pier Paolo Patrucco
  • Francesco Quatraro

Abstract

The article investigates the effects of the agglomeration of technological activities on the growth in regional productivity, applying the notion of pecuniary knowledge externalities. Pecuniary knowledge externalities enable one to appreciate both the gains and losses associated with the regional concentration of knowledge-generating activities. Both are two sides of the same coin. The gains are due to the reduction in the prices of knowledge as input into its dedicated markets, while the losses stem from the reduction in the prices of knowledge as an output. This analysis allows us to contextualize the effect of geographic proximity on knowledge externalities and their impact on regional growth. Our analysis leads to the hypothesis of an inverted U‐shaped relationship between the agglomeration of innovation activities and productivity growth. The empirical analysis based on a large sample of European regions from 1996 to 2003 supports the hypothesis that agglomeration yields diminishing net positive effects beyond a maximum.

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Bibliographic Info

Article provided by Clark University in its journal Economic Geography.

Volume (Year): 87 (2011)
Issue (Month): 1 (January)
Pages: 23-50

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Handle: RePEc:bla:ecgeog:v:87:y:2011:i:1:p:23-50

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Keywords: geographic agglomeration ; knowledge transactions ; pecuniary knowledge externalities ; patents ; total factor productivity ;

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Citations

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Cited by:
  1. Massimiliano Corradini & Valeria Costantini & Susanna Mancinelli & Massimiliano Mazzanti, 2011. "Environmental and innovation performance in a dynamic impure public good framework," Departmental Working Papers of Economics - University 'Roma Tre' 0141, Department of Economics - University Roma Tre.
  2. Matthias Siller & Christoph Hauser & Janette Walde & Gottfried Tappeiner, 2014. "The Multiple Facets of Regional Innovation," Working Papers 2014-19, Faculty of Economics and Statistics, University of Innsbruck.
  3. Antonelli Cristiano & Ferraris Gianluigi, 2012. "Endogenous knowledge externalities: an agent based simulation model where schumpeter meets Marshall," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201202, University of Turin.
  4. Cardamone, Paola, 2014. "R&D, spatial proximity and productivity at firm level: evidence from Italy," MPRA Paper 57149, University Library of Munich, Germany.
  5. F. Quatraro & S. Usai, 2014. "Are knowledge flows all alike? Evidence from European regions," Working Paper CRENoS 201405, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  6. Cristiano Antonelli & Gianluigi Ferraris, 2011. "Innovation as an Emerging System Property: An Agent Based Simulation Model," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 14(2), pages 1.
  7. Corradini, Massimiliano & Costantini, Valeria & Mancinelli, Susanna & Mazzanti, Massimiliano, 2014. "Unveiling the dynamic relation between R&D and emission abatement," Ecological Economics, Elsevier, vol. 102(C), pages 48-59.
  8. E. Marrocu & S. Usai & R. Paci, 2013. "Networks, proximities and inter-firm knowledge exchanges," Working Paper CRENoS 201311, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  9. Costantini, Valeria & Mazzanti, Massimiliano & Montini, Anna, 2013. "Environmental performance, innovation and spillovers. Evidence from a regional NAMEA," Ecological Economics, Elsevier, vol. 89(C), pages 101-114.
  10. Alessandra Colombelli & Francesco Quatraro, 2013. "New Firm Formation and the properties of local knowledge bases: Evidence from Italian NUTS 3 regions," Working Papers hal-00858989, HAL.

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