Reference-Dependent Utility in an Industrial Cluster
This article tries to explain the exceptional levels of knowledge creation in certain industrial clusters, levels that are seemingly higher than what is implied by the usual models of atomistic agents who do not internalize externalities. For this purpose, we introduce reference-dependent utility into an OLG model of an industrial cluster where agents allocate resources between consumption and knowledge investments and where the latter spills over to the rest of the cluster. It is shown that if the agents in the cluster have altruistic preferences, they will internalize the externalities from knowledge investments and create more knowledge than if they were atomistic or considered their neighbors to be rivals.
|Date of creation:||09 Jan 2003|
|Date of revision:||30 Jun 2003|
|Publication status:||Forthcoming in Knowledge Spillover and Knowledge Management. , Karlsson, C., Flensburg, P., Hörte, S. (eds.), Lawrence Erlbaum.|
|Contact details of provider:|| Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden|
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Samuel Bowles, 1998. "Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 75-111, March.
- Matthew Rabin., 1997.
"Psychology and Economics,"
Economics Working Papers
97-251, University of California at Berkeley.
- Paul M Romer, 1999.
"Increasing Returns and Long-Run Growth,"
Levine's Working Paper Archive
2232, David K. Levine.
- Harbaugh, Richmond, 1996. "Falling behind the Joneses: relative consumption and the growth-savings paradox," Economics Letters, Elsevier, vol. 53(3), pages 297-304, December.
- Christopher D Carroll & Jody Overland & David N Weil, 1997.
"Comparison Utility in a Growth Model,"
Economics Working Paper Archive
387, The Johns Hopkins University,Department of Economics.
- Edward L. Glaeser & David Laibson & Bruce Sacerdote, 2001.
"The Economic Approach to Social Capital,"
Harvard Institute of Economic Research Working Papers
1916, Harvard - Institute of Economic Research.
- Amos Tversky & Daniel Kahneman, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, Oxford University Press, vol. 106(4), pages 1039-1061.
When requesting a correction, please mention this item's handle: RePEc:hhs:gunwpe:0087. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marie Andersson)
If references are entirely missing, you can add them using this form.