Why are technological spillovers spatially bounded ? A market orientated approach

E. Baranes and Jean-Philippe Tropeano

Cahiers du CREDEN (CREDEN Working Papers) from CREDEN (Centre de Recherche en Economie et Droit de l'Energie), Faculty of Economics, University of Montpellier 1

Abstract: According to empirical evidence, technological spillovers are spatially bounded. This is one of the main reasons why firms are induced to locate in close prox-imity despite tough competition. This paper is an attempt to endogenize such spillovers. For that purpose, we try to explain why spatial proximity gives more incentives to competing firms to share knowledge. We show that spatial proxim-ity is the best way for firms to prevent free-riding in case of knowledge sharing. Indeed, Þercer competition impedes free riding provided that such a behavior dampens firms efficiency and have a dramatic effect on profits. Moreover, our results have important implications for regional policy. We point out that a slight decrease in transport costs triggers spatial polarization which implies knowledge sharing and thereby enhances innovation. A more dramatic decrease in transport costs attains both the objectives of increasing innovation and regional equity.

Pages: 21 pages
Date: 2002
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Journal Article: Why are technological spillovers spatially bounded? A market orientated approach (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:mop:credwp:02.06.29

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