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The Dynamics of Knowledge Diversity and Economic Growth

  • Berliant, Marcus
  • Fujita, Masahisa

How is long run economic growth related to the endogenous diversity of knowledge? We formulate and study a microeconomic model of knowledge creation, through the interactions among a group of heterogeneous R & D workers, embedded in a growth model to address this question. In contrast with the traditional literature, in our model the composition of the research work force in terms of knowledge heterogeneity matters, in addition to its size, in determining the production of new knowledge. Moreover, the heterogeneity of the work force is endogenous. Income to these workers accrues as patent income, whereas transmission of newly created knowledge to all such workers occurs due to public transmission of patent information. Knowledge in common is required for communication, but differential knowledge is useful to bring originality to the endeavor. Whether or not the system reaches the most productive state depends on the strength of the public knowledge transmission technology. Equilibrium paths are found analytically. Long run economic growth is positively related to both the effectiveness of pairwise R & D worker interaction and to the effectiveness of public knowledge transmission.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 21009.

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Date of creation: 27 Feb 2010
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Handle: RePEc:pra:mprapa:21009
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  1. Marcus Berliant & Robert R Reed & Ping Wang, 2003. "Knowledge Exchange, Matching, and Agglomeration," Levine's Bibliography 666156000000000395, UCLA Department of Economics.
  2. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  3. Masahisa Fujita & Marcus Berliant, 2004. "Knowledge Creation as a Square Dance on the Hilbert Cube," Econometric Society 2004 North American Summer Meetings 204, Econometric Society.
  4. Helsley, Robert W. & Strange, William C., 2004. "Knowledge barter in cities," Journal of Urban Economics, Elsevier, vol. 56(2), pages 327-345, September.
  5. Gilles Duranton & Diego Puga, 2000. "Nursery cities: urban diversity, process innovation and the life-cycle of products," LSE Research Online Documents on Economics 20204, London School of Economics and Political Science, LSE Library.
  6. Alwyn Young, 1998. "Growth without Scale Effects," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 41-63, February.
  7. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
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  9. Pietro Peretto & Sjak Smulders, 2002. "Technological Distance, Growth And Scale Effects," Economic Journal, Royal Economic Society, vol. 112(481), pages 603-624, July.
  10. Manuel Trajtenberg & Gil Shiff & Ran Melamed, 2006. "The "Names Game": Harnessing Inventors' Patent Data for Economic Research," NBER Working Papers 12479, National Bureau of Economic Research, Inc.
  11. Charles I. Jones, 1999. "Growth: With or Without Scale Effects?," American Economic Review, American Economic Association, vol. 89(2), pages 139-144, May.
  12. Michele Boldrin & David K Levine, 2008. "Against Intellectual Monopoly," Levine's Bibliography 122247000000002371, UCLA Department of Economics.
  13. John P. WALSH & NAGAOKA Sadao, 2009. "Who Invents?: Evidence from the Japan-U.S. inventor survey," Discussion papers 09034, Research Institute of Economy, Trade and Industry (RIETI).
  14. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
  15. Benjamin F. Jones, 2005. "The burden of knowledge and the ‘death of the Renaissance man’: Is innovation getting harder?," Proceedings, Federal Reserve Bank of San Francisco.
  16. 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.
  17. Weitzman, Martin L., 1998. "Recombinant Growth," Scholarly Articles 3708468, Harvard University Department of Economics.
  18. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  19. Christian Ghiglino, 2005. "Balanced Growth with a Network of Ideas," Working Papers 546, Queen Mary University of London, School of Economics and Finance.
  20. Dinopoulos, Elias & Thompson, Peter, 1998. " Schumpeterian Growth without Scale Effects," Journal of Economic Growth, Springer, vol. 3(4), pages 313-35, December.
  21. Olsson, Ola, 2000. " Knowledge as a Set in Idea Space: An Epistemological View on Growth," Journal of Economic Growth, Springer, vol. 5(3), pages 253-75, September.
  22. Ola Olsson, 2005. "Technological Opportunity and Growth," Journal of Economic Growth, Springer, vol. 10(1), pages 31-53, 01.
  23. repec:tpr:qjecon:v:113:y:1998:i:2:p:331-360 is not listed on IDEAS
  24. repec:oup:qjecon:v:113:y:1998:i:2:p:331-360 is not listed on IDEAS
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