Knowledge spillovers and inequality

Jan Eeckhout, Boyan Jovanovic

    Research output: Contribution to journalArticle

    Abstract

    We develop a dynamic model with knowledge spillovers in production. The model contains two opposing forces. Imitation of other firms helps followers catch up with leaders, but the prospect of doing so makes followers want to free ride. The second force dominates and creates permanent inequality. We show that the greater are the average spillovers and the easier they are to obtain, the greater is the free-riding and inequality. More directed copying raises inequality by raising the free-riding advantages of hanging back. Using Compustat and patent-citation data we find that copying is highly undirected.

    Original languageEnglish (US)
    Pages (from-to)1290-1307
    Number of pages18
    JournalAmerican Economic Review
    Volume92
    Issue number5
    DOIs
    StatePublished - Dec 2002

    ASJC Scopus subject areas

    • Economics and Econometrics

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