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Absorptive Capacity, Knowledge Spillovers and Incentive Contracts

Luis Aguiar and Philippe Gagnepain ()
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Philippe Gagnepain: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: We attempt to identify and measure potential knowledge spillovers in the French urban transport sector, which is strongly regulated and where a few large corporations are in charge of operating several urban networks simultaneously. We build and estimate a structural cost model where the service is regulated by a local government and is provided by a single operator. Knowledge spillovers are directly linked to the know-how of a specific corporation, but they also depend on the incentive power of the regulatory contract which shapes the effort of the local managers. Exerting an effort in a specific network allows a cost reduction in this network, but it also benefit other networks that are members of the same corporation. Our model provides us with estimates of the operators' absorptive capacity, which is their in-house knowledge power in order to optimally benefit from spillovers. We find that diversity of knowledge across operators of a same corporation improves absorptive capacity and increases the flow of spillovers. Simulation exercises provide evidence of significant reductions in total operating cost following the enlargement of industrial groups.

Keywords: Diversity of knowledge; Public transport; Knowledge spillovers; Absorptive capacity; Cost incentives; Effort (search for similar items in EconPapers)
Date: 2021-01
New Economics Papers: this item is included in nep-com, nep-cse, nep-cta, nep-reg and nep-ure
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03110851
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Journal Article: Absorptive capacity, knowledge spillovers and incentive contracts (2022) Downloads
Working Paper: Absorptive capacity, knowledge spillovers and incentive contracts (2022)
Working Paper: Absorptive capacity, knowledge spillovers and incentive contracts (2022)
Working Paper: Absorptive Capacity, Knowledge Spillovers and Incentive Contracts (2021) Downloads
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