IngentaConnect The governance of localized knowledge externalities

Authors: Antonelli, Cristiano¹; Patrucco, Pier Paolo¹; Quatraro, Francesco¹

Source: International Review of Applied Economics, Volume 22, Number 4, July 2008 , pp. 479-498(20)

Publisher: Routledge, part of the Taylor & Francis Group

Purchase options

The full text electronic article is available for purchase. You will be able to download the full text electronic article after payment.

$36.48 plus tax Refund Policy

Abstract:

This paper articulates the hypothesis that there is an optimal size of knowledge pools. Too little a density of innovation activities reduces the accessibility of external knowledge. Too large a density enhances congestion and reduces appropriateness. Firms can benefit from actual increasing returns stemming from the indivisibility, replicability and non-exhaustibility of knowledge only when the size of innovation networks is comprised between the two extremes. The empirical evidence confirms that the output elasticity of knowledge, included in a typical Griliches production function, is itself a quadratic function of the size of innovation networks. Knowledge externalities do trigger increasing returns that are external to each firm, only within a well defined interval. Knowledge externalities are a property of the system into which firms are embedded. As such they are endogenous to the system and likely to exhibit specific properties related to the changing characteristics of the system itself. The quality of knowledge governance mechanisms in place plays a key role in assessing the actual size of the net positive effects of knowledge externalities.

Keywords: knowledge externalities; localized increasing returns; knowledge governance

Document Type: Research article

DOI: 10.1080/02692170802137661

Affiliations: 1: Laboratorio di Economia dell'Innovazione 'Franco Momigliano', Dipartimento di Economia, Universita di Torino, Via Po 5310128 Torino, Italy