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American Economic Review: Vol. 92 No. 5 (December 2002)

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Knowledge Spillovers and Inequality

Article Citation

Eeckhout, Jan, and Boyan Jovanovic. 2002. "Knowledge Spillovers and Inequality ." The American Economic Review, 92(5): 1290-1307.

DOI: 10.1257/000282802762024511

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.

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Authors

Eeckhout, Jan
Jovanovic, Boyan


American Economic Review



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