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The governance of localized knowledge externalities

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Author Info

  • Cristiano Antonelli
  • Pier Paolo Patrucco
  • Francesco Quatraro

Abstract

This paper articulates the hypothesis that there is an optimal size of knowledge pools. Too little a density of innovation activities reduces the accessibility of external knowledge. Too large a density enhances congestion and reduces appropriateness. Firms can benefit from actual increasing returns stemming from the indivisibility, replicability and non-exhaustibility of knowledge only when the size of innovation networks is comprised between the two extremes. The empirical evidence confirms that the output elasticity of knowledge, included in a typical Griliches production function, is itself a quadratic function of the size of innovation networks. Knowledge externalities do trigger increasing returns that are external to each firm, only within a well defined interval. Knowledge externalities are a property of the system into which firms are embedded. As such they are endogenous to the system and likely to exhibit specific properties related to the changing characteristics of the system itself. The quality of knowledge governance mechanisms in place plays a key role in assessing the actual size of the net positive effects of knowledge externalities.

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Bibliographic Info

Article provided by Taylor and Francis Journals in its journal International Review of Applied Economics.

Volume (Year): 22 (2008)
Issue (Month): 4 ()
Pages: 479-498

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Handle: RePEc:taf:irapec:v:22:y:2008:i:4:p:479-498

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Related research

Keywords: knowledge externalities; localized increasing returns; knowledge governance;

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References

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  1. Antonelli Cristiano, 2003. "Localized technological change," Dipartimento di Economia "S. Cognetti de Martiis" LEI & BRICK - Laboratorio di economia dell'innovazione "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio Carlo 200305, University of Turin.
  2. Jaffe, A.B. & Trajtenberg, M., 1998. "International Knowledge Flows: Evidence from Patent Citation," Papers 11-98, Tel Aviv.
  3. Nooteboom, B. & Vanhaverbeke, W.P.M. & Duijsters, G.M. & Gilsing, V.A. & Oord, A., 2006. "Optimal Cognitive Distance and Absorptive Capacity," Discussion Paper 2006-33, Tilburg University, Center for Economic Research.
  4. Griliches, Zvi, 1990. "Patent Statistics as Economic Indicators: A Survey," Journal of Economic Literature, American Economic Association, vol. 28(4), pages 1661-1707, December.
  5. Consoli, Davide, 2007. "Services and systemic innovation: a cross-sectoral analysis," Journal of Institutional Economics, Cambridge University Press, vol. 3(01), pages 71-89, April.
  6. Antonelli, Cristiano, 2001. "The Microeconomics of Technological Systems," OUP Catalogue, Oxford University Press, number 9780199245536, September.
  7. Koen Frenken & Frank Van Oort & Thijs Verburg, 2007. "Related Variety, Unrelated Variety and Regional Economic Growth," Regional Studies, Taylor and Francis Journals, vol. 41(5), pages 685-697.
  8. Antonelli, Cristiano, 2007. "The system dynamics of collective knowledge: From gradualism and saltationism to punctuated change," Journal of Economic Behavior & Organization, Elsevier, vol. 62(2), pages 215-236, February.
  9. Zvi Griliches, 1998. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 17-45 National Bureau of Economic Research, Inc.
  10. Ron Boschma, 2005. "Proximity and Innovation: A Critical Assessment," Regional Studies, Taylor and Francis Journals, vol. 39(1), pages 61-74.
  11. Pier Paolo Patrucco, 2009. "Collective knowledge production costs and the dynamics of technological systems," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 18(3), pages 295-310.
  12. Elisa Giuliani, 2007. "The selective nature of knowledge networks in clusters: evidence from the wine industry," Journal of Economic Geography, Oxford University Press, vol. 7(2), pages 139-168, March.
  13. Paul Romer, 1991. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
  14. Acs, Zoltan J. & Anselin, Luc & Varga, Attila, 2002. "Patents and innovation counts as measures of regional production of new knowledge," Research Policy, Elsevier, vol. 31(7), pages 1069-1085, September.
  15. Antonelli Cristiano, 2005. "Models of knowledge and systems of governance," Dipartimento di Economia "S. Cognetti de Martiis" LEI & BRICK - Laboratorio di economia dell'innovazione "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio Carlo 200501, University of Turin.
  16. Abramovitz, Moses & David, Paul A, 1973. "Reinterpreting Economic Growth: Parables and Realities," American Economic Review, American Economic Association, vol. 63(2), pages 428-39, May.
  17. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1987. "Appropriating the Returns from Industrial Research and Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(3), pages 783-832.
  18. repec:fth:harver:1473 is not listed on IDEAS
  19. Kaldor, Nicholas, 1975. "What Is Wrong with Economic Theory," The Quarterly Journal of Economics, MIT Press, vol. 89(3), pages 347-57, August.
  20. Kaldor, Nicholas, 1972. "The Irrelevance of Equilibrium Economics," Economic Journal, Royal Economic Society, vol. 82(328), pages 1237-55, December.
  21. Paul M. Romer, 1994. "The Origins of Endogenous Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 3-22, Winter.
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Citations

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Cited by:
  1. Stan Metcalfe & Dimitri Gagliardi & Nicola De Liso & Ronnie Ramlogan, 2012. "Innovation Systems and Innovation Ecologies: Innovation Policy and Restless Capitalism," Openloc Working Papers 1203, Public policies and local development.
  2. Metcalfe, Stan & Ramlogan, Ronnie, 2005. "Innovation Systems and the Competitive Progress in Developing Economies," Centre on Regulation and Competition (CRC) Working papers 30672, University of Manchester, Institute for Development Policy and Management (IDPM).
  3. Eric BROUILLAT (GREThA UMR CNRS 5113) & Yannick LUNG (GREThA UMR CNRS 5113), 2010. "Spatial distribution of innovative activities and economic performances: A geographical-friendly model," Cahiers du GREThA 2010-11, Groupe de Recherche en Economie Théorique et Appliquée.
  4. Antonelli Cristiano & Ferraris Gianluigi, 2009. "Innovation as an emerging system property : an agent based model," Dipartimento di Economia "S. Cognetti de Martiis" LEI & BRICK - Laboratorio di economia dell'innovazione "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio Carlo 200911, University of Turin.

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