Reference-Dependent Utility in an Industrial Cluster
AbstractThis article tries to explain the exceptional levels of knowledge creation in certain industrial clusters, levels that are seemingly higher than what is implied by the usual models of atomistic agents who do not internalize externalities. For this purpose, we introduce reference-dependent utility into an OLG model of an industrial cluster where agents allocate resources between consumption and knowledge investments and where the latter spills over to the rest of the cluster. It is shown that if the agents in the cluster have altruistic preferences, they will internalize the externalities from knowledge investments and create more knowledge than if they were atomistic or considered their neighbors to be rivals.
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Bibliographic InfoPaper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 87.
Length: 15 pages
Date of creation: 09 Jan 2003
Date of revision: 30 Jun 2003
Publication status: Forthcoming in Knowledge Spillover and Knowledge Management. , Karlsson, C., Flensburg, P., Hörte, S. (eds.), Lawrence Erlbaum.
Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
More information through EDIRC
industrial cluster; reference-dependent utility; knowledge spillovers; relative consumption;
Find related papers by JEL classification:
- R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
- R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Production Analysis, and Firm Location - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-01-12 (All new papers)
- NEP-ENT-2003-01-12 (Entrepreneurship)
- NEP-URE-2003-01-12 (Urban & Real Estate Economics)
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