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The value of a new idea: knowledge transmission, workers' mobility and market structure

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  • Marini, Marco A.

Abstract

We model the process of knowledge transmission among firms via workers mobility as a multi-stage game. In our setup an idea to be realized needs that the agent informed about the idea recruits another agent from a pool of uninformed people. This constraint generates a recursive effect of knowledge transmission via players mobility across firms which affects simultaneously the players payoffs and the number of active players engaged in market competition. We provide sufficient conditions for the game to possess a unique symmetric subgame perfect equilibrium in which all incumbent players deter the exit of their collaborators. The equilibrium outcome is shown to depend upon the success of the idea over time, expressed by the behaviour of the market demand and on playerstime preferences. A few other intuitions are provided on the interplay between technology, market structure and the market value of an innovative idea.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1687.

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Date of creation: 10 Jul 2005
Date of revision: Jan 2006
Publication status: Published in Chaos, Solitons and Fractals 29, 2006.29(2006): pp. 697-706
Handle: RePEc:pra:mprapa:1687

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Keywords: Innovation; Workers’ Mobility; Knowledge Transmission; Subgame Perfect Nash Equilibrium; Recursive Games;

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  1. Pakes, Ariel & Nitzan, Shmuel, 1983. "Optimum Contracts for Research Personnel, Research Employment, and the Establishment of "Rival" Enterprises," Scholarly Articles 3428538, Harvard University Department of Economics.
  2. Biais, Bruno & Perotti, Enrico, 2008. "Entrepreneurs and New Ideas," IDEI Working Papers 347, Institut d'Économie Industrielle (IDEI), Toulouse, revised 0000.
  3. Raghuram G. Rajan & Luigi Zingales, 2001. "The Firm As A Dedicated Hierarchy: A Theory Of The Origins And Growth Of Firms," The Quarterly Journal of Economics, MIT Press, vol. 116(3), pages 805-851, August.
  4. Stole, Lars A & Zwiebel, Jeffrey, 1996. "Intra-firm Bargaining under Non-binding Contracts," Review of Economic Studies, Wiley Blackwell, vol. 63(3), pages 375-410, July.
  5. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
  6. Asher Wolinsky, 1996. "A Theory of the Firm with Non-Binding Employment Contracts," Discussion Papers 1166, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Bentley MacLeod & James M. Malcomson, 1985. "Reputation and Hierarchy in Dynamic Models of Employment," Working Papers 628, Queen's University, Department of Economics.
  8. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1988. "Appropriating the Returns from Industrial R&D," Cowles Foundation Discussion Papers 862, Cowles Foundation for Research in Economics, Yale University.
  9. Mariagiovanna Baccara & Ronny Razin, 2003. "From Thought to Practice: Appropriation and Endogenous Market Structure with Imperfect Intellectual Property Rights," Working Papers 03-11, New York University, Leonard N. Stern School of Business, Department of Economics.
  10. Cooper, David P., 2001. "Innovation and reciprocal externalities: information transmission via job mobility," Journal of Economic Behavior & Organization, Elsevier, vol. 45(4), pages 403-425, August.
  11. Stanley M. Besen & Leo J. Raskind, 1991. "An Introduction to the Law and Economics of Intellectual Property," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 3-27, Winter.
  12. Feinstein, Jonathan S. & Stein, Jeremy, 1988. "Employee opportunism and redundancy in firms," Journal of Economic Behavior & Organization, Elsevier, vol. 10(4), pages 401-414, December.
  13. J·n Z·bojnÌk, 2002. "A Theory of Trade Secrets in Firms," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(3), pages 831-855, August.
  14. Stole, Lars A & Zwiebel, Jeffrey, 1996. "Organizational Design and Technology Choice under Intrafirm Bargaining," American Economic Review, American Economic Association, vol. 86(1), pages 195-222, March.
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