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Knowledge Creation as a Square Dance on the Hilbert Cube

  • Berliant, Marcus
  • Fujita, Masahisa

This paper presents a micro-model of knowledge creation and transfer in a small group of people. 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 a¤ects 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. Unlike the two-person case, in the four person case we show that the equilibrium process of knowledge creation may converge to the most productive state. Equilibrium paths are found analytically, and they are a discontinuous function of initial heterogeneity.

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Paper provided by Institute of Developing Economies, Japan External Trade Organization(JETRO) in its series IDE Discussion Papers with number 14.

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Date of creation: Oct 2004
Date of revision:
Publication status: Published in IDE Discussion Paper. No. 14. 2004.10
Handle: RePEc:jet:dpaper:dpaper14
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  1. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  2. Ajay Agrawal & Iain Cockburn & John McHale, 2003. "Gone But Not Forgotten: Labor Flows, Knowledge Spillovers, and Enduring Social Capital," NBER Working Papers 9950, National Bureau of Economic Research, Inc.
  3. Marcus Berliant & Robert R Reed & Ping Wang, 2003. "Knowledge Exchange, Matching, and Agglomeration," Levine's Bibliography 666156000000000395, UCLA Department of Economics.
  4. Michele Boldrin & David K Levine, 2008. "Against Intellectual Monopoly," Levine's Bibliography 122247000000002371, UCLA Department of Economics.
  5. Fujita, M. & Thisse, J.-F., . "Economics of agglomeration," CORE Discussion Papers RP 1250, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Helsley, Robert W. & Strange, William C., 2004. "Knowledge barter in cities," Journal of Urban Economics, Elsevier, vol. 56(2), pages 327-345, September.
  7. Keely, Louise C., 2003. "Exchanging good ideas," Journal of Economic Theory, Elsevier, vol. 111(2), pages 192-213, August.
  8. Gilles Duranton & Diego Puga, 2000. "Nursery Cities: Urban diversity, process innovation, and the life-cycle of products," Working Papers dpuga-00-01, University of Toronto, Department of Economics.
  9. Keely,L.C., 2002. "Exchanging good ideas," Working papers 14, Wisconsin Madison - Social Systems.
  10. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October.
  11. Aoki, Masahiko, 1994. "The Contingent Governance of Teams: Analysis of Institutional Complementarity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(3), pages 657-76, August.
  12. Jovanovic, Boyan & Rob, Rafael, 1989. "The Growth and Diffusion of Knowledge," Review of Economic Studies, Wiley Blackwell, vol. 56(4), pages 569-82, October.
  13. 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 1008-38, October.
  14. Auerswald, Philip & Kauffman, Stuart & Lobo, Jose & Shell, Karl, 2000. "The production recipes approach to modeling technological innovation: An application to learning by doing," Journal of Economic Dynamics and Control, Elsevier, vol. 24(3), pages 389-450, March.
  15. Masahisa Fujita & Shlomo Weber, 2004. "Strategic Immigration Policies and Welfare in Heterogeneous Countries," Working Papers 2004.2, Fondazione Eni Enrico Mattei.
  16. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  17. Berliant, Marcus & Fujita, Masahisa, 2007. "Dynamics of knowledge creation and transfer: The two person case," MPRA Paper 4973, University Library of Munich, Germany.
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