Thomas P. Lyon, Erb Faculty Member was published in the International Journal of Industrial Organization, November 2004, 22: 1115-1135. Neslihan Aydogan and Thomas P. Lyon (2004)
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 multimember technology trading coalitions such as Sematech and Silicon Valley.