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Knowledge externalities and demand pull: The European evidence

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  • Antonelli, Cristiano
  • Gehringer, Agnieszka

Abstract

This paper elaborates the microeconomic foundations of the demand pull hypothesis stressing the role of vertical knowledge externalities stemming from user–producer knowledge interactions that parallel vertical transactions. The paper articulates and tests the hypothesis that such competent demand is actually able to pull technological change only when it is expressed by advanced users, able to provide relevant knowledge externalities to their customers. Using input output tables we test empirically this hypothesis for 15 European countries in the years 1995–2007. The evidence confirms that the increase in productivity of the upstream sectors is positively influenced by the sector-level derived demand, according to the upstream rates of introduction of innovations and to the intensity of the user–producer interactions. The policy implications of the analysis enable to elaborate and implement the notion of a ‘competent’ public demand.

Suggested Citation

  • Antonelli, Cristiano & Gehringer, Agnieszka, 2015. "Knowledge externalities and demand pull: The European evidence," Economic Systems, Elsevier, vol. 39(4), pages 608-631.
  • Handle: RePEc:eee:ecosys:v:39:y:2015:i:4:p:608-631
    DOI: 10.1016/j.ecosys.2015.03.001
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    Cited by:

    1. Gehringer, Agnieszka & Martínez-Zarzoso, Inmaculada & Nowak-Lehmann Danzinger, Felicitas, 2014. "TFP estimation and productivity drivers in the European Union," Center for European, Governance and Economic Development Research Discussion Papers 189, University of Goettingen, Department of Economics.
    2. Valeria De Bonis, 2016. "Innovation, competition and public procurement in the pre-commercial phase," Public Finance Research Papers 23, Istituto di Economia e Finanza, DIGEF, Sapienza University of Rome.
    3. Gehringer, Agnieszka, 2016. "Knowledge externalities and sectoral interdependences: Evidence from an open economy perspective," Technological Forecasting and Social Change, Elsevier, vol. 102(C), pages 240-249.
    4. Cristiano Antonelli, 2017. "Endogenous innovation: the creative response," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 26(8), pages 689-718, November.
    5. Antonelli Cristiano & Gehringer Agnieszka, 2013. "Demand pull and technological flows within innovation systems: the intra-European evidence," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201303, University of Turin.
    6. Cristiano Antonelli & Agnieszka Gehringer, 2015. "The competent demand pull hypothesis: which sectors do play a role?," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 32(1), pages 97-134, April.

    More about this item

    Keywords

    Derived demand; Knowledge externalities; User–producer sectoral interactions; Input output tables;

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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