Knowledge Creation as a Square Dance on the Hilbert Cube

45 Pages Posted: 22 Oct 2008

See all articles by Marcus Berliant

Marcus Berliant

Washington University in St. Louis - Department of Economics

Masahisa Fujita

Kyoto University - Institute of Economic Research

Abstract

This article presents a micromodel of knowledge creation through the interactions among a group of people. The model features myopic agents in a pure externality model of interaction. Surprisingly, for a large set of initial conditions we find that the equilibrium process of knowledge creation converges to the most productive state, where the population splits into smaller groups of optimal size; close interaction takes place within each group only. This optimal size is larger as heterogeneity of knowledge is more important in the knowledge production process. Equilibrium paths are found analytically; they are a discontinuous function of initial heterogeneity.

Suggested Citation

Berliant, Marcus and Fujita, Masahisa, Knowledge Creation as a Square Dance on the Hilbert Cube. International Economic Review, Vol. 49, Issue 4, pp. 1251-1295, November 2008. Available at SSRN: https://ssrn.com/abstract=1287401 or http://dx.doi.org/10.1111/j.1468-2354.2008.00512.x

Marcus Berliant (Contact Author)

Washington University in St. Louis - Department of Economics ( email )

One Brookings Drive
St. Louis, MO 63130
United States

Masahisa Fujita

Kyoto University - Institute of Economic Research ( email )

Yoshida-Honmachi
Sakyo-ku
Kyoto 606-8501
Japan
+81 75 753 7122 (Phone)
+81 75 753 7198 (Fax)

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