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where and when positive knowledge externalities that knowledge as an input makes
available at costs that are lower than equilibrium levels are not of set by negative
externalities that reduce the price that knowledge as an output can command in
market exchanges. Such circumstances in fact do not hold everywhere and at all
times, but only in highly idiosyncratic conditions (Antonelli, 2008b); and
2.
To appreciate the negative ef ects of excess proximity within geographical and tech-
nological clusters in terms of both reduced levels of knowledge appropriability and
hence reduction of the prices for the products that embody new proprietary knowl-
edge, and increased knowledge governance costs.
These elements make it possible to reconsider the notion of externalities. As it is well
known, the Marshallian literature has identii ed two quite dif erent types of externalities:
(1) technological externalities, and (2) pecuniary externalities. Technological externali-
ties consist of direct interdependence among producers. Pecuniary externalities consist
of indirect interdependence. In the former case the interdependence is not mediated by
the market mechanisms. In the latter, interdependence takes place via ef ects on the price
system (Martin, 2007; Meade, 1952; Scitovsky, 1954; Viner, 1931).
Technological externalities exist when unpaid production factors enter the production
function. According to Scitovsky this is the case of technological external economies.
They apply when:
The producer's output may be inl uenced by the action of persons more directly and in other
ways than through their of er of services used and demand for products produced by the i rm.
This is the counterpart of the previous case, and its main instance is inventions that facilitate
production and become available to producers without charge. (Scitovsky, 1954, p. 144)
Pecuniary externalities apply when the prices for production factors dif er from equi-
librium levels and rel ect the ef ects of external forces. According to Scitovsky (1954),
pecuniary external economies consist of 'interdependence among producers through the
market mechanism' (p. 146).
3
There are positive pecuniary externalities when the market
price of production factors happens to be lower than equilibrium levels because of the
ef ects of market interactions among i rms in the growth process.
So far, the notion of pecuniary externalities has found little application in understand-
ing the
generation
of technological change, as distinct from the adoption and direction
of technological knowledge, and as distinct from the rate, of technological change.
Pecuniary knowledge externalities become relevant as soon as: (1) i rms are credited with
the creative capability to generate intentionally technological knowledge and to introduce
technological changes that are consistent with their specii c and contextual conditions,
and (2) the active role of knowledge users is recognized. In order to command new tech-
nological knowledge generated by third parties, and to take advantage of it, users need
to perform specii c activities that entail specii c resources. This is true for the adopters
and imitators of new products and processes when technological knowledge is embodied,
for the customers of patents and licenses when knowledge is disembodied, and for the
preceptors of knowledge spillovers. In all cases users can access external knowledge only
at a cost: such costs have an ef ect on a i rm's technological choices. Hence the need for
pecuniary knowledge externalities (David and Rosenbloom, 1990).
The appreciation of pecuniary externalities makes it possible to understand how the
