Skip to main content
eScholarship
Open Access Publications from the University of California

Knowledge spillovers in cities: An auction approach

Abstract

© 2015 Elsevier Inc. This paper proposes a micro-foundation for knowledge spillovers. I model a city in which free knowledge transfers are bids by experts to entrepreneurs who auction jobs. These knowledge bids resemble a consultant's pitch to a potential client. Two fundamental properties of knowledge underlie the model: First, it is often necessary to reveal some knowledge to demonstrate its value. Second, knowledge is freely reproducible. Larger cities generate more meetings between experts and entrepreneurs, resulting in more learning and better matches. Larger cities also foster competition for jobs, which motivates experts to raise their knowledge bids. These results demonstrate how competitive behavior can be a source of agglomeration economies, and contribute to explain the higher productivity of urban workers.

Many UC-authored scholarly publications are freely available on this site because of the UC Academic Senate's Open Access Policy. Let us know how this access is important for you.

Main Content
Current View