Neslihan Aydogan and Thomas P. Lyon
"Spatial Proximity and Complementarities in the Trading of Tacit Knowledge"
JEL codes: L1, O3, R1
Keywords: Tacit knowledge, clusters, knowledge trading, complementarities, spatial proximity

Abstract: We model knowledge-trading coalitions in which the transfer of tacit knowledge is unverifiable and requires face-to-face contact, making spatial proximity important. When there are sufficient "complementarities" in knowledge exchange, successful exchange is facilitated if firms can meet in a central location, thereby economizing on travel costs. When complementarities are small, however, a central location may be undesirable because it is more vulnerable to cheating than a structure involving bilateral travel between firms. We believe that our framework may help explain the structure and stability of multi-member technology trading coalitions such as Sematech and Silicon Valley.

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