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Dynamics of knowledge creation and transfer: The two person case

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  • Marcus Berliant
  • Masahisa Fujita

Abstract

This paper presents a micro-model of knowledge creation and transfer for a couple. Our model incorporates two key aspects of the cooperative process of knowledge creation: (i) heterogeneity of people in their state of knowledge is essential for successful cooperation in the joint creation of new ideas, while (ii) the very process of cooperative knowledge creation affects the heterogeneity of people through the accumulation of knowledge in common. The model features myopic agents in a pure externality model of interaction. In the two person case, we show that the equilibrium process tends to result in the accumulation of too much knowledge in common compared to the most productive state. Equilibrium paths are found analytically, and they are a discontinuous function of initial heterogeneity.
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Suggested Citation

  • Marcus Berliant & Masahisa Fujita, 2009. "Dynamics of knowledge creation and transfer: The two person case," International Journal of Economic Theory, The International Society for Economic Theory, vol. 5(2), pages 155-179.
  • Handle: RePEc:bla:ijethy:v:5:y:2009:i:2:p:155-179
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    References listed on IDEAS

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    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Marcus Berliant & Masahisa Fujita, 2004. "Knowledge Creation as a Square Dance on the Hilbert Cube," Game Theory and Information 0401004, EconWPA, revised 17 Apr 2005.
    3. Marcus Berliant & Masahisa Fujita, 2008. "Knowledge Creation As A Square Dance On The Hilbert Cube," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1251-1295, November.
    4. Boyan Jovanovic & Rafael Rob, 1989. "The Growth and Diffusion of Knowledge," Review of Economic Studies, Oxford University Press, vol. 56(4), pages 569-582.
    5. Jones, Larry E & Manuelli, Rodolfo E, 1990. "A Convex Model of Equilibrium Growth: Theory and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1008-1038, October.
    6. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, pages 3-42.
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    Citations

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    Cited by:

    1. Marcus Berliant & Masahisa Fujita, 2008. "Knowledge Creation As A Square Dance On The Hilbert Cube," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1251-1295, November.
    2. Backman, Mikaela & Kohlhase, Janet, 2013. "The Influence of Diversity on the Formation, Survival and Growth of New Firms," Working Paper Series in Economics and Institutions of Innovation 337, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    3. Nathan, Max, 2013. "The Wider Economic Impacts of High-Skilled Migrants: A Survey of the Literature," IZA Discussion Papers 7653, Institute for the Study of Labor (IZA).
    4. Tomohiro MACHIKITA & Yasushi UEKI, 2011. "Impacts of Incoming Knowledge on Product Innovation: Technology Transfer in Auto-related Industries in Developing Economies," Working Papers DP-2011-08, Economic Research Institute for ASEAN and East Asia (ERIA).
    5. Berliant, Marcus & Fujita, Masahisa, 2012. "Culture and diversity in knowledge creation," Regional Science and Urban Economics, Elsevier, pages 648-662.
    6. Bonin, Holger, 2017. "Report No. 75: The Potential Economic Benefits of Education of Migrants in the EU," IZA Research Reports 75, Institute for the Study of Labor (IZA).
    7. Max Nathan, 2015. "Same difference? Minority ethnic inventors, diversity and innovation in the UK," Journal of Economic Geography, Oxford University Press, vol. 15(1), pages 129-168.
    8. Tomohiro Machikita & Yasushi Ueki, 2011. "Interactive Learning-driven Innovation in Upstream-Downstream Relations: Evidence from Mutual Exchanges of Engineers in Developing Economies," Working Papers DP-2011-10, Economic Research Institute for ASEAN and East Asia (ERIA).
    9. Mano, Yukichi & Yamamura, Eiji, 2012. "The Influence of a wife’s working status on her husband’s accumulation of human capital," MPRA Paper 37247, University Library of Munich, Germany.
    10. Gianmarco I.P. Ottaviano & Giovanni Prarolo, 2009. "Cultural Identity And Knowledge Creation In Cosmopolitan Cities," Journal of Regional Science, Wiley Blackwell, vol. 49(4), pages 647-662.
    11. Max Nathan, 2014. "The wider economic impacts of high-skilled migrants: a survey of the literature for receiving countries," IZA Journal of Migration, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), pages 1-20.
    12. Tomohiro Machikita & Yasushi Ueki, 2011. "The Impact of Face-to-face and Frequent Interactions on Innovation: Evidence from Upstream-Downstream Relations," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 3(3), pages 519-548, October.
    13. Chih-Sheng Hsieh & Michael D. König & Xiaodong Liu, 2012. "Network formation with local complements and global substitutes: the case of R&D networks," ECON - Working Papers 217, Department of Economics - University of Zurich, revised Feb 2017.
    14. Couture, Victor, 2015. "Knowledge spillovers in cities: An auction approach," Journal of Economic Theory, Elsevier, pages 668-698.
    15. Tadashi Yagi, 2014. "Knowledge Creation by Consumers and Optimal Strategies of Firms," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), pages 585-596.
    16. Fujita, Masahisa, 2007. "Towards the new economic geography in the brain power society," Regional Science and Urban Economics, Elsevier, pages 482-490.
    17. Mano, Yukichi & Yamamura, Eiji, 2011. "Human Capital Accumulation through Interaction between a Married Couple: Comparison between a Housewife and a Working Wife," MPRA Paper 28936, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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