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Communicating Technical Knowledge

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  • James Bessen

    ()
    (Research on Innovation, Boston University School of Law)

Abstract

Firms reduce the marginal cost of communicating technical knowledge by “formalizing” it in standards, dominant designs or other ways. But this only pays when new technology is sufficiently developed. In a simple model with endogenous communication costs, two equilibria emerge. With formalized knowledge, new technologies replace old and patents increase innovation. But without formalization, new technologies coexist with old, patents decrease innovation, and inventors might freely exchange knowledge. This affects policy and can explain why some innovation is highly localized despite global production and why some nations that innovate with mature technologies have difficulty moving to the innovation frontier.

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Bibliographic Info

Paper provided by Research on Innovation in its series Working Papers with number 1001.

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Date of creation: 2010
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Handle: RePEc:roi:wpaper:1001

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Web page: http://www.researchoninnovation.org

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Keywords: technology; knowledge; diffusion; spillovers; human capital; information good;

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References

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  1. Bessen James, 2009. "Evaluating the Economic Performance of Property Systems," Review of Law & Economics, De Gruyter, vol. 5(3), pages 1037-1061, December.
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  9. Christine MacLeod & Alessandro Nuvolari, 2006. "Inventive Activities, Patents and Early Industrialization. A Synthesis of Research Issues," DRUID Working Papers 06-28, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  10. Moser, Petra, 2011. "Do Patents Weaken the Localization of Innovations? Evidence from World's Fairs," The Journal of Economic History, Cambridge University Press, vol. 71(02), pages 363-382, June.
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  12. Nancy Gallini and Suzanne Scotchmer., 2001. "Intellectual Property: When Is It the Best Incentive System?," Economics Working Papers E01-303, University of California at Berkeley.
  13. James Bessen & Eric Maskin, 2009. "Sequential innovation, patents, and imitation," RAND Journal of Economics, RAND Corporation, vol. 40(4), pages 611-635.
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  17. Peter B. Meyer, 2003. "Episodes of Collective Invention," Working Papers 368, U.S. Bureau of Labor Statistics.
  18. Ajay Agrawal & Rebecca Henderson, 2002. "Putting Patents in Context: Exploring Knowledge Transfer from MIT," Management Science, INFORMS, vol. 48(1), pages 44-60, January.
  19. Allen, Robert C., 1983. "Collective invention," Journal of Economic Behavior & Organization, Elsevier, vol. 4(1), pages 1-24, March.
  20. Ryan L. Lampe & Petra Moser, 2009. "Do Patent Pools Encourage Innovation? Evidence from the 19th-Century Sewing Machine Industry," NBER Working Papers 15061, National Bureau of Economic Research, Inc.
  21. Henkel, Joachim, 2006. "Selective revealing in open innovation processes: The case of embedded Linux," Research Policy, Elsevier, vol. 35(7), pages 953-969, September.
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  24. Arora, Ashish & Gambardella, Alfonso, 1994. "The changing technology of technological change: general and abstract knowledge and the division of innovative labour," Research Policy, Elsevier, vol. 23(5), pages 523-532, September.
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