The Derived Demand for Knowledge

Cristiano Antonelli

Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio Carlo Alberto. WP series from University of Turin

Abstract: This paper calls attention on the effects of the economic properties of knowledge on its derived demand, an issue that has not received enough attention in the literature. The results of the analysis suggests that, because of the idiosyncratic -Arrovian- properties of knowledge, a chain of effects takes place: i) in downstream markets the price of goods that have been produced using knowledge as an intermediate good, falls, ii) consequently the derived demand in upstream knowledge markets –both within corporations and by them to knowledge intensive business services (KIBS) - has a lower position, and iii) the price of knowledge is lower than it should be were knowledge a standard good traded in competitive markets, iv) with negative consequences in terms of adverse selection of large scale high quality research projects, but v) possible compensating effects stemming from the use of knowledge spillovers to generate cheaper knowledge. Such results have important implications for economic policy discussions and decisions.

Pages: 31 pages
Date: 2016-07
New Economics Papers: this item is included in nep-cse, nep-ino and nep-knm
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Related works:
Journal Article: The derived demand for knowledge (2017)
Working Paper: The Derived Demand for Knowledge (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:uto:labeco:201608

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