Geography Reference
In-Depth Information
characteristics of the technological knowledge, and the types of competition in product
and factor markets, and the institutional context (Beaudry and Breschi, 2003).
The characteristics of the system in terms of knowledge governance mechanisms and
hence the levels of knowledge transaction, communication and interaction costs are
crucial to assess the long-term viability of the system dynamics.
7. Conclusions and policy implications
Technological and scientii c knowledge is a collective, highly imperfect and heterogene-
ous activity. First of all it is not only an output, but also an input, an essential interme-
diary factor of production that is relevant both in the generation of new technological
knowledge and in the generation of other goods. The dynamic ei ciency of each i rm and
of the system at large depends on the factors af ecting the generation and dissemination
of knowledge.
The identii cation of the dual characteristics of technological knowledge as both an
output and an input in the production of other goods and in the production of further
knowledge, together with the understanding of the intrinsic complementarity between
external and internal sources of knowledge, both non-disposable inputs in the generation
of new knowledge, make it possible to apply the notion of pecuniary externalities in a
novel context.
Pecuniary knowledge externalities are a powerful analytical tool that applies to the
analysis of external knowledge as a necessary and yet costly production factor in the
generation of new knowledge. The use of the notion of 'technological' externalities is
consistent with the view that external knowledge falls from heaven like manna and spills
freely into the atmosphere.
Pecuniary knowledge externalities are not always and universally positive.
Agglomeration within geographic and technological clusters can yield negative conse-
quences in terms of reduced appropriability of proprietary knowledge. Agglomeration
within clusters yields positive ef ects only when the ef ects of pecuniary knowledge exter-
nalities on the costs of external knowledge are stronger than the ef ects of pecuniary knowl-
edge externalities on the prices of the goods that embody new technological knowledge. A
clear case for excess agglomeration has been identii ed in terms of reduced knowledge
appropriability. Uncontrolled leakage and reduced exclusivity of proprietary knowledge
can impede the long-term sustainability of such a process of self-propelling growth.
The quality of knowledge governance mechanisms that include the assessment of intel-
lectual property right regimes is crucial for the actual viability of public policies based on
knowledge externalities.
Such results call attention to the role of a public knowledge policy. The need for
an economic policy regarding the production and dissemination of knowledge seems
stronger than ever. Spontaneous knowledge governance mechanisms need to be comple-
mented by a public policy. The implementation of the institutional set-up by means of
policy actions that reduce uncertainty and create information, so as to reduce the ef ects
of bounded rationality and information loads, seems to be a viable strategy to reduce
the divide between proi t maximization and social welfare. Public policy can reduce the
major limits of the knowledge governance system so as to favor a more ef ective system
of producing and circulating knowledge, with interventions aimed at increasing the
amount of information each agent has access to.
