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Relational Knowledge Transfers

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  • Garicano, Luis
  • Rayo, Luis

Abstract

An expert must train a novice. The novice initially has no cash, so he can only pay the expert with the accumulated surplus from his production. At any time, the novice can leave the relationship with his acquired knowledge and produce on his own. The sole reason he does not is the prospect of learning in future periods. The profit-maximizing relationship is structured as an apprenticeship, in which all production generated during training is used to compensate the expert. Knowledge transfer takes a simple form. In the first period, the expert gifts the novice a positive level of knowledge, which is independent of the players' discount rate. After that, the novice's total value of knowledge grows at the players' discount rate until all knowledge has been transferred. The inefficiencies that arise from this contract are caused by the expert's artificially slowing down the rate of knowledge transfer rather than by her reducing the total amount of knowledge eventually transferred. We show that these inefficiencies are larger the more patient the players are. Finally, we study the impact of knowledge externalities across players.

Suggested Citation

  • Garicano, Luis & Rayo, Luis, 2013. "Relational Knowledge Transfers," CEPR Discussion Papers 9460, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:9460
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    3. Wei Zhao & Claudio Mezzetti & Ludovic Renou & Tristan Tomala, 2020. "Contracting over persistent information," Papers 2007.05983, arXiv.org, revised Mar 2021.
    4. Jason J Sandvik & Richard E Saouma & Nathan T Seegert & Christopher T Stanton, 2020. "Workplace Knowledge Flows," The Quarterly Journal of Economics, Oxford University Press, vol. 135(3), pages 1635-1680.
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    6. Baccara, Mariagiovanna & Lee, SangMok & Yariv, Leeat, 2023. "Task allocation and on-the-job training," Journal of Economic Theory, Elsevier, vol. 207(C).
    7. Antoni-Komar, Irene & Rommel, Marius & Posse, Dirk & Wittkamp, Moritz & Paech, Niko, 2021. "Stable Schools in der Solidarischen Landwirtschaft. Ein transdisziplinäres Setting zur Förderung organisationaler Stabilität," 61st Annual Conference, Berlin, Germany, September 22-24, 2021 317057, German Association of Agricultural Economists (GEWISOLA).
    8. Hagiu, Andrei & Wright, Julian, 2015. "Multi-sided platforms," International Journal of Industrial Organization, Elsevier, vol. 43(C), pages 162-174.
    9. Heski Bar‐Isaac & Clare Leaver, 2022. "Training, Recruitment, and Outplacement as Endogenous Adverse Selection," Economica, London School of Economics and Political Science, vol. 89(356), pages 849-861, October.
    10. Kukharskyy, Bohdan, 2020. "A tale of two property rights: Knowledge, physical assets, and multinational firm boundaries," Journal of International Economics, Elsevier, vol. 122(C).
    11. Francesc Dilmé & Daniel Garrett, 2019. "Relational Contracts: Public Versus Private Savings," CRC TR 224 Discussion Paper Series crctr224_2019_132, University of Bonn and University of Mannheim, Germany.
    12. Purnomo, Agung, 2021. "Teori Kewirausahaan Limpahan Pengetahuan: Inovasi dari Mobilisasi Informasi," OSF Preprints k26vh, Center for Open Science.
    13. Santiago Caicedo & Arthur Seibold & Miguel Espinosa, 2019. "The Effects of Mandating Training in Firms: Theory and Evidence from the Colombian Apprenticeship Program," 2019 Meeting Papers 888, Society for Economic Dynamics.
    14. Zdravkovic, Srdan & Magnusson, Peter & Miocevic, Dario & Westjohn, Stanford A., 2021. "Vicarious animosity: Taking sides on provocative issues," Journal of Business Research, Elsevier, vol. 124(C), pages 77-85.
    15. Venturini, Roberto & Ceccagnoli, Marco & van Zeebroeck, Nicolas, 2019. "Knowledge integration in the shadow of tacit spillovers: Empirical evidence from U.S. R&D labs," Research Policy, Elsevier, vol. 48(1), pages 180-205.

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    More about this item

    Keywords

    General human capital; Knowledge; Relational contracts; Skills;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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