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on Knowledge Management and Knowledge Economy |
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Issue of 2026–08–24
four papers chosen by Laura Nicola-Gavrila, Centrul European de Studii Manageriale în Administrarea Afacerilor |
| By: | George, Babu (Alcorn State University) |
| Abstract: | Arrow (1962b) identified a fundamental paradox in markets for information: a buyer cannot value knowledge without possessing it, and a seller cannot demonstrate knowledge without surrendering it. Six decades of institutional design, from patent law to trade secret doctrine, answer that problem. This paper argues that Arrow’s paradox is a limiting case of a more general phenomenon. Every market transaction occurs across an interaction surface through which knowledge flows in both directions, and the classical analysis holds only under four restrictive assumptions: that knowledge is an artifact, that disclosure is one-shot, that it runs from seller to buyer alone, and that absorption is automatic. Relaxing these assumptions yields a general theory of epistemic flux in which the direction of payment and the direction of net knowledge flow are independent. The framework recovers the classical paradox, the economics of consulting, the theory of the firm’s knowledge boundary, and the platform economy as parameter settings of a single model, and it is closed with an equilibrium: buyers choose usage and absorption, a hub prices access, and welfare is evaluated against a planner. Three results follow for markets in machine intelligence. First, an inverse information paradox: consumption of intelligence requires disclosure of context, and the discloser cannot value what she surrenders, because its value is realized only in aggregation with disclosures she cannot observe. Second, a two-sided welfare theorem: where the positional harm of rival access dominates, decentralized adoption over-discloses and under-absorbs relative to the planner; where the level benefit of better models dominates, it under-discloses, so the externality’s sign is an empirical object rather than an assumption. Third, an epistemic subsidy: a hub that values aggregate flux prices inference below marginal cost, which reinterprets free tiers and zero-retention premiums as the subsidy returned. The paper unifies Arrow’s two 1962 contributions, learning by doing and the information paradox, into one apparatus; explains why vendor competition cannot dissipate the asymmetry, since money can rebate a subsidy but cannot restore relative position; and specifies the institutions the new regime will require. |
| Date: | 2026–07–17 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:7nrbp_v1 |
| By: | Colin Davis (Doshisha University); Ken-ichi Hashimoto (Kobe University); Ken Tabata (Kwansei Gakuin University) |
| Abstract: | This paper studies how environmental policy designed to reduce transboundary pollution affects long-run productivity growth through shifts in the geographic location of industry. We construct a two-country endogenous growth and endogenous market structure framework in which there is a positive link between the geographic concentration of industry and the strength of knowledge spillovers from production to innovation. Emissions are generated as a byproduct of production. We show that an increase in the emissions tax of the country with a larger (smaller) share of industry lowers the concentration of industry leading to weaker (stronger) knowledge spillovers and a slower (faster) rate of productivity growth. In addition, we identify cases where a rise in the emissions tax of the country with a smaller share of industry lowers emissions while increasing productivity growth. With endogenous emissions taxes, a numerical analysis shows that stronger knowledge diffusion leads to higher tax rates, faster productivity growth, and lower global emissions. In contrast, trade liberalization leads to lower tax rates and eventually raises global emissions despite faster productivity growth. Our results highlight that the relationship between productivity growth and global emissions depends critically on the form of economic integration. |
| Keywords: | Asset bubbles; Emissions Taxes, Industry Location, Knowledge Diffusion, Trade Liberalization, Productivity Growth, Global Emissions, Endogenous Market Structure, Endogenous Policy |
| JEL: | F12 O40 Q56 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:kyo:wpaper:1129 |
| By: | Bai, Jie; Barwick, Panle; Cao, Shengmao; Li, Shanjun |
| Abstract: | This paper studies the impact of FDI via quid pro quo (technology for market access) in facilitating knowledge spillovers and quality upgrading. Our context is the Chinese automobile industry, where foreign automakers are required to set up joint ventures (JVs) with domestic automakers to facilitate technology transfers in return for market access. Our identification strategy exploits a unique dataset of detailed vehicle quality measures and relies on within-product variation across quality dimensions. We show that affiliated domestic automakers tend to adopt the quality strengths of their JV partners, consistent with knowledge spillovers. We rule out alternative explanations, such as endogenous JV formation, geographic proximity, overlapping customer bases, brand image association, and patent transfers. Additional analysis suggests that worker flows and supplier networks mediate knowledge spillovers. Overall, knowledge spillovers due to ownership affiliation under quid pro quo contributed 8.3% of the quality improvement experienced by affiliated domestic models between 2001 and 2014, relative to nonaffiliated domestic models. |
| JEL: | O14 O25 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19440 |
| By: | Bahar, Dany; Arcay, Guillermo; Daboin Pacheco, Jesus Enrique; Hausmann, Ricardo |
| Abstract: | This paper examines Japan’s economic performance in recent years, uncovering a narrative that challenges conventional views. Despite slow productivity growth, Japan maintains the highest economic complexity globally due to its sophisticated export portfolio. The study reveals that while Japan has been experiencing a decline in goods export market shares it has had a rise in services exports, particularly in R&D licensing. Furthermore, Japan has significantly increased its net foreign assets and direct investments abroad, resulting in abnormal high returns. These results put together suggest that Japanese firms —perhaps in reaction to a stagnant domestic labor force—are leveraging their extensive knowledge capital by investing and redeploying resources internationally, which are generating these higher returns. The increasing wealth generated abroad results, we show, in an expansion of non-tradable activities which are less productive, driving down aggregate productivity growth. The paper also highlights concerns over declining innovation quality, posing risks to Japan’s future economic performance and its ability to redeploy its accumulated knowledge to enjoy from unusually high returns from their foreign investments. The findings emphasize the need for policy reforms to enhance Japan’s productivity of non-tradable activities, to reverse the decline in innovation quality and an immigration policy that may change the downward trend in labor supply. |
| Keywords: | Japan; Dark matter; Economic complexity; Productivity growth; Baumol's cost disease |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19368 |