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Productivity Growth and Pecuniary Knowledge Externalities: An Empirical Analysis of Agglomeration Economies in European Regions

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  • Cristiano Antonelli
  • Pier Paolo Patrucco
  • Francesco Quatraro

Abstract

The article investigates the effects of the agglomeration of technological activities on the growth in regional productivity, applying the notion of pecuniary knowledge externalities. Pecuniary knowledge externalities enable one to appreciate both the gains and losses associated with the regional concentration of knowledge-generating activities. Both are two sides of the same coin. The gains are due to the reduction in the prices of knowledge as input into its dedicated markets, while the losses stem from the reduction in the prices of knowledge as an output. This analysis allows us to contextualize the effect of geographic proximity on knowledge externalities and their impact on regional growth. Our analysis leads to the hypothesis of an inverted U‐shaped relationship between the agglomeration of innovation activities and productivity growth. The empirical analysis based on a large sample of European regions from 1996 to 2003 supports the hypothesis that agglomeration yields diminishing net positive effects beyond a maximum.

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  • Cristiano Antonelli & Pier Paolo Patrucco & Francesco Quatraro, 2011. "Productivity Growth and Pecuniary Knowledge Externalities: An Empirical Analysis of Agglomeration Economies in European Regions," Economic Geography, Clark University, vol. 87(1), pages 23-50, January.
  • Handle: RePEc:bla:ecgeog:v:87:y:2011:i:1:p:23-50
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    File URL: http://hdl.handle.net/10.1111/j.1944-8287.2010.01104.x
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    1. Mas-Verdú, Francisco & Ortiz-Miranda, Dionisio & García-Álvarez-Coque, José María, 2016. "Examining organizational innovations in different regional settings," Journal of Business Research, Elsevier, vol. 69(11), pages 5324-5329.
    2. Stefano Usai & Emanuela Marrocu & Raffaele Paci, 2017. "Networks, Proximities, and Interfirm Knowledge Exchanges," International Regional Science Review, , vol. 40(4), pages 377-404, July.
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    5. Cristiano Antonelli, 2011. "The Economic Complexity of Technological Change: Knowledge Interaction and Path Dependence," Chapters,in: Handbook on the Economic Complexity of Technological Change, chapter 1 Edward Elgar Publishing.
    6. Chen, Ping-Chuan & Hung, Shiu-Wan, 2016. "An actor-network perspective on evaluating the R&D linking efficiency of innovation ecosystems," Technological Forecasting and Social Change, Elsevier, vol. 112(C), pages 303-312.
    7. Antonelli Cristiano & Ferraris Gianluigi, 2012. "Endogenous knowledge externalities: an agent based simulation model where schumpeter meets Marshall," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201202, University of Turin.
    8. repec:bla:growch:v:48:y:2017:i:3:p:313-335 is not listed on IDEAS
    9. Cristiano Antonelli, 2017. "Endogenous innovation: the creative response," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 26(8), pages 689-718, November.
    10. Robert Huggins & Hiro Izushi & Daniel Prokop & Piers Thompson, 2014. "Regional competitiveness, economic growth and stages of development," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics, vol. 32(2), pages 255-283.
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    12. repec:taf:regstd:v:51:y:2017:i:8:p:1246-1258 is not listed on IDEAS
    13. Grafström, Jonas & Jaunky, Vishal, 2017. "Convergence of Incentive Capabilities within the European Union," Ratio Working Papers 301, The Ratio Institute.
    14. Costantini, Valeria & Mazzanti, Massimiliano & Montini, Anna, 2013. "Environmental performance, innovation and spillovers. Evidence from a regional NAMEA," Ecological Economics, Elsevier, vol. 89(C), pages 101-114.
    15. Alessandra Colombelli & Francesco Quatraro, 2013. "New Firm Formation and the properties of local knowledge bases: Evidence from Italian NUTS 3 regions," Working Papers hal-00858989, HAL.
    16. Cristiano Antonelli & Gianluigi Ferraris, 2011. "Innovation as an Emerging System Property: An Agent Based Simulation Model," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 14(2), pages 1-1.
    17. Sandro Montresor & Francesco Quatraro, 2015. "Smart Specialization Strategies and Key Enabling Technologies. Regional evidence from European patent data," Papers in Evolutionary Economic Geography (PEEG) 1525, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Aug 2015.
    18. Grillitsch, Markus & Nilsson, Magnus, 2015. "Firm Performance in the Periphery: On the Relation between Firm-Internal Knowledge and Local Knowledge Spillovers," Papers in Innovation Studies 2015/40, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.
    19. Robert Huggins & Piers Thompson, 2015. "Entrepreneurship, innovation and regional growth: a network theory," Small Business Economics, Springer, vol. 45(1), pages 103-128, June.
    20. Grafström, Jonas & Söderholm, Patrik & Gawel, Erik & Lehmann, Paul & Strunz, Sebastian, 2017. "Knowledge Accumulation from Public Renewable Energy R&D in the European Union: Converging or Diverging Trends?," Ratio Working Papers 292, The Ratio Institute.
    21. Massimiliano Mazzanti & Valeria Costantini & Susanna Mancinelli & Massimilano Corradini, 2011. "Environmental and Innovation Performance in a Dynamic Impure Public Good Framework," Working Papers 201117, University of Ferrara, Department of Economics.
    22. Francesco Quatraro & Stefano Usai, 2017. "Are knowledge flows all alike? Evidence from European regions," Regional Studies, Taylor & Francis Journals, vol. 51(8), pages 1246-1258, August.
    23. Matthias Siller & Christoph Hauser & Janette Walde & Gottfried Tappeiner, 2014. "The Multiple Facets of Regional Innovation," Working Papers 2014-19, Faculty of Economics and Statistics, University of Innsbruck.
    24. Fátima Diniz & Elias Soukiazis, 2015. "Economies to Scale and the Importance of Human Capital in the Moulds Industry in Portugal: A Micro Panel Data Approach," GEMF Working Papers 2015-11, GEMF, Faculty of Economics, University of Coimbra.
    25. repec:kap:sbusec:v:48:y:2017:i:3:d:10.1007_s11187-016-9805-y is not listed on IDEAS

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