Spatial Proximity and Complementarities in the Trading of Tacit Knowledge

By March 6, 2004Library

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)

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 multimember technology trading coalitions such as Sematech and Silicon Valley.

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