Knowledge Exchange, Matching, and Agglomeration

Despite wide recognition their significant explaining sustained growth and economic develop- ment, uncompensated knowledge spillovers have not been fully modeled with microeconomic foun- dation. main purpose paper illustrate exchange of knowledge conse- quences agglomerative activity a general-equilibrium search-theoretic framework. Agents, pos- sessing differentiated types of knowledge, search partners exchange ideas and create new knowl- edge order improve production efficacy. When individuals' types knowledge too diverse, match likely generate significant innovations. demonstrate extent agglomeration has significant implications patterns of information flows economies. Further, simultaneously determining the patterns knowledge exchange spatial agglomeration economy identify additional channels interaction between agglomerative activity and knowledge exchange. Finally, contrary previous work spatial agglomeration, our model suggests that agglomerative environments may either under-sp..