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Knowledge Spillovers and Inequality

  • Jan Eeckhout
  • Boyan Jovanovic

We develop a dynamic model with knowledge spillovers in production. The model contains two opposing forces. Imitation of other firms helps followers catch up with leaders, but the prospect of doing so makes followers want to free ride. The second force dominates and creates permanent inequality. We show that the greater are the average spillovers and the easier they are to obtain, the greater is the free-riding and inequality. More directed copying raises inequality by raising the free-riding advantages of hanging back. Using Compustat and patent-citation data we find that copying is highly undirected.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/000282802762024511
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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 92 (2002)
Issue (Month): 5 (December)
Pages: 1290-1307

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Handle: RePEc:aea:aecrev:v:92:y:2002:i:5:p:1290-1307
Note: DOI: 10.1257/000282802762024511
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