Abstract
This paper presents a model of technological cooperation between firms in infant industries that was inspired by the spectacular growth of the Japanese cotton spinning industry beginning in the 1880s. Information sharing accelerates diffusion of new technologies developed by more advanced countries and results from what we call the neighboring farmer effect – the willingness to help competitors when output price is fixed. Technologies that produce industry-wide benefits are crucial for industry development but are subject to sub-optimal provision because of freeriding. To mitigate this problem, Japanese firms devised a sophisticated institutional arrangement to increase the private returns to innovation.
| Original language | American English |
|---|---|
| State | Published - Jul 27 2002 |
Disciplines
- Economics