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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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File URL: http://www.tandfonline.com/doi/abs/10.1080/02692170802137661
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Bibliographic Info

Article provided by Taylor & 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. Adam Jaffe & Manuel Trajtenberg, 1999. "International Knowledge Flows: Evidence From Patent Citations," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 8(1-2), pages 105-136.
  2. 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.
  3. Antonelli, Cristiano, 2003. "Localized Technological Change," 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 200305, University of Turin.
  4. S. Illeris & G. Akehurst, 2002. "Introduction," The Service Industries Journal, Taylor & Francis Journals, vol. 22(1), pages 1-3, January.
  5. Ron Boschma, 2005. "Proximity and Innovation: A Critical Assessment," Regional Studies, Taylor & Francis Journals, vol. 39(1), pages 61-74.
  6. Koen Frenken & Frank Van Oort & Thijs Verburg, 2007. "Related Variety, Unrelated Variety and Regional Economic Growth," Regional Studies, Taylor & Francis Journals, vol. 41(5), pages 685-697.
  7. Pier Paolo Patrucco, 2009. "Collective knowledge production costs and the dynamics of technological systems," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 18(3), pages 295-310.
  8. Nooteboom, B. & Vanheverbeke, W.P.M. & Duysters, G.M. & Gilsing, V.A. & Oord van den, A,J,, 2005. "Optimal cognitive distance and absorptive capacity," Working Papers 05.05, Eindhoven Center for Innovation Studies.
  9. Zvi Griliches, 1991. "Patent Statistics as Economic Indicators: A Survey," NBER Working Papers 3301, National Bureau of Economic Research, Inc.
  10. Antonelli, Cristiano, 2005. "The Embedded Generation of Knowledge: Contextual Spillovers and Localized Appropriability," 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 200506, University of Turin.
  11. 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.
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  13. 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.
  14. 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.
  15. 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.
  16. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October.
  17. Antonelli, Cristiano, 2001. "The Microeconomics of Technological Systems," OUP Catalogue, Oxford University Press, number 9780199245536.
  18. Kaldor, Nicholas, 1975. "What Is Wrong with Economic Theory," The Quarterly Journal of Economics, MIT Press, vol. 89(3), pages 347-57, August.
  19. Antonelli, Cristiano, 2005. "Models of knowledge and systems of governance," Journal of Institutional Economics, Cambridge University Press, vol. 1(01), pages 51-73, June.
  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.
  22. 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.
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Citations

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Cited by:
  1. 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).
  2. 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.
  3. 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.
  4. Cristiano, Antonelli & Ferraris, Gianluigi, 2009. "Innovation as an Emerging System Property: an Agent Based Model," 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 200911, University of Turin.

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