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The Cluster as Market Organization

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Author Info

  • Peter Maskell
  • Mark Lorenzen

Abstract

The many competing schools of thought concerning themselves with industrial clusters have at least one thing in common: they all agree that clusters are real life phenomena characterized by the co-localization of separate economic entities, which are in some sense related, but not joined together by any common ownership or management. So hierarchies they are certainly not. Yet, it is usually taken for granted that clusters, almost regardless of how they are defined, all expatriate the 'swollen middle' of various hybrid 'forms of long-term contracting, reciprocal trading, regulation, franchising and the like' residing somewhere between hierarchies and markets. This fundamental (but usually implicit) assumption would, perhaps, be justified if markets could be reduced to events of exchange of property rights, between large numbers of price-taking anonymous buyers and sellers supplied with perfect information as they are commonly conceived in mainstream economics. One of the original attractions of Neoclassical price theory was precisely that it promised a way of analysing the economy in general and market exchange in particular independently of specific institutional settings. However, introducing transaction costs as more than fees paid to intermediaries leads inevitably to comparative institutional analysis and, not to be forgotten, to the perception of markets as institutions with specific characteristics of their own. Some sets of characteristics are so common that they represent a specific market organization or market form. The cluster is one such specific market organization that is structured along territorial lines because this enables the building of a set of institutions that are helpful in conducting certain kinds of economic activities. Supported by empirical illustrations the paper argues that clusters are markets where commodities, services and knowledge are traded in a notably efficient way among the insiders without restricting their abilities to build pipelines and to interact with suppliers and customers residing elsewhere. The institutions characterizing this market form help creating an environment among insiders that reduces the barriers to acquiring and utilising knowledge produced or used locally.

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Bibliographic Info

Paper provided by DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies in its series DRUID Working Papers with number 03-14.

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Date of creation: 2003
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Handle: RePEc:aal:abbswp:03-14

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Web page: http://www.druid.dk/

Related research

Keywords: Clusters; organisation; knowledge transfer; transaction costs;

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References

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Citations

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Cited by:
  1. Luciana Lazzeretti & Rafael Boix & Francesco Capone, 2008. "Do creative industries cluster? Mapping Creative Local Production Systems in Italy," Working Papers wpdea0805, Department of Applied Economics at Universitat Autonoma of Barcelona.
  2. Thomas Brenner & André Mühlig, 2007. "Factors and Mechanisms Causing the Emergence of Local Industrial Clusters - A Meta-Study of 159 Cases," Papers on Economics and Evolution 2007-23, Max Planck Institute of Economics, Evolutionary Economics Group.
  3. Wedemeier, Jan, 2009. "Creative cities and the concept of diversity," HWWI Research Papers 1-20, Hamburg Institute of International Economics (HWWI).
  4. Wixted, Brian, 2006. "Cluster Complexes: A Framework for Understanding the Internationalisation of Innovation Systems," MPRA Paper 846, University Library of Munich, Germany.
  5. Erkan Erdil & Dilek Cetin, 2008. "Innovation and Relationships in an Organized Indutrial District: Ankara Sincan Industrial District," STPS Working Papers 0802, STPS - Science and Technology Policy Studies Center, Middle East Technical University, revised Aug 2008.
  6. Igor Pilipenko, 2005. "Clusters and Territorial-Industrial Complexes - Similar Approaches or Different Concepts? - first Evidence from Analysis of Development of Russian Regions," ERSA conference papers ersa05p70, European Regional Science Association.
  7. Mark Lorenzen & Lars Frederiksen, 2005. "On the Economics of Innovation Projects Product Experimentation in the Music Industry," DRUID Working Papers 05-23, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  8. David Hojman, 2005. "Network Learning, Principal-Agent Conflict, and Award-Winning Wine-Making in Chile's Colchagua Valley," Research Papers 200512, University of Liverpool Management School.
  9. Kerstin Press, 2007. "When does defection pay?," Journal of Economic Interaction and Coordination, Springer, vol. 2(1), pages 67-84, June.
  10. Tóth, József, 2010. "Use of coordination fields in food economics," IAMO Forum 2010: Institutions in Transition – Challenges for New Modes of Governance 52716, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
  11. Fiorenza Belussi & Silvia Rita Sedita, 2005. "The symbiotic division of labour between heterogeneous districts. The development of ornamental horticulture in the Netherlands and Italy," "Marco Fanno" Working Papers 0011, Dipartimento di Scienze Economiche "Marco Fanno".
  12. Pitelis, Christos & Pseiridis, Anastasia, 2007. "A Conceptual Framework for Firm Cooperation and Clusters and Their Impact on Productivity and Competitiveness," Papers DYNREG13, Economic and Social Research Institute (ESRI).
  13. Paul Muller & Julien Pénin, 2006. "Why do firms disclose knowledge and how does it matter?," Journal of Evolutionary Economics, Springer, vol. 16(1), pages 85-108, April.
  14. Luciana Lazzeretti & Rafael Boix & Francesco Capone, 2009. "Why do creative industries cluster? An analysis of the determinants of clustering of creative industries," IERMB Working Paper in economics 0902, Institut d'Estudis Regionals i Metropolitans de Barcelona.
  15. Ozlem Ozkanli & Erkan Erdil & Erdal Akdeve, 2008. "Innovation And Relationships In Industrial Districts: The Case Of Turkey," STPS Working Papers 0801, STPS - Science and Technology Policy Studies Center, Middle East Technical University, revised Aug 2008.
  16. Alexander Cole, 2007. "Beyond the Knowledge-Based Theory of the Geographic Cluster," Papers in Evolutionary Economic Geography (PEEG) 0708, Utrecht University, Section of Economic Geography, revised Nov 2007.

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