Geography Reference
In-Depth Information
lower relative prices of both specii c knowledge inputs and knowledge as an output
af ect the intentional direction of technological change and the emergence and decline of
technological systems. In all cases, such price levels are determined by the idiosyncratic
characteristics of the localized regional, historical, institutional and industrial context
(Antonelli, 2009).
Firms have a clear incentive to search for potential complementarities between inter-
nal and external factors and intentionally characterize their innovative strategies so as
to implement the interface between internal and external factors, achieve dynamic com-
plementarities and increase their productivity and proi tability. Let us analyze these two
aspects in more detail.
Pecuniary knowledge externalities are not always and exclusively positive.
Agglomeration in geographical and technological space, respectively within technologi-
cal clusters and technological systems, has negative ef ects that are seldom identii ed. The
density of i rms accessing the same knowledge pools may have negative consequences
in terms of reduced appropriability of technological knowledge. The clustering of i rms
in the same region favors the uncontrolled mobility of qualii ed workers and hence the
leakage of sensitive information and competence. The likelihood of informal contacts
among workers of dif erent companies is increased and favored by repeated interactions
and the complementarity and interdependence of research activities. Once more i rms are
exposed to the uncontrolled loss of proprietary knowledge.
As Kenneth Arrow (1962a) has pointed out, knowledge is indeed characterized by
non-rivalry in its use. While two or more parties cannot share the simultaneous usage of
the same tangible good, repeated usage of knowledge by many parties at the same time is
possible. Each user does not deprive or limit the conditions of usage of other parties.
Knowledge however is characterized by substantial rivalry in exchange. Firms can
extract substantial monopolistic rents from the exclusive command of original and
unprecedented technological knowledge. The innovative i rm can charge monopolistic
prices for products that embody new technological knowledge as long as it is able to
retain its exclusive control.
Non-rivalry in use and non-rivalry in exchange coincide only when perfect competition
applies. But perfect competition applies only when all i rms have access to all technologi-
cal knowledge available with no restriction. When the access to knowledge is restricted,
perfect competition no longer applies. Knowledge holders have a clear incentive to delay
the dissemination and leakage of knowledge to third parties.
In Schumpeterian competition non-rivalry in use and non-rivalry in exchange dif er
widely. As it is well known in fact the exclusive control of proprietary technological
knowledge impedes imitation and hence stretches the duration of monopolistic rents.
The access to the same pools of knowledge reduces the costs of external knowledge as
an input into the generation of new knowledge, but reduces also its appropriability.
5. Pecuniary knowledge externalities at work
External knowledge is a non-disposable input because nobody can command all the
knowledge available at any point in time. Internal and external knowledge are comple-
mentary inputs that it is necessary to combine in order to produce new technological
knowledge. Following Nelson (1982) and Antonelli (1999) we can specify a knowledge
production function.
