Making a Market: Infrastructure, Integration, and the Rise of Innovation

88 Pages Posted: 10 Mar 2020 Last revised: 11 Mar 2020

See all articles by David Andersson

David Andersson

Uppsala University

Thor Berger

Research Institute of Industrial Economics (IFN)

Erik Prawitz

Research Institute of Industrial Economics (IFN)

Date Written: February 18, 2020

Abstract

We exploit exogenous variation arising from the historical rollout of the Swedish railroad network across municipalities to identify the impacts of lowered interaction costs on innovative activity. A network connection led to a surge in local innovation due to an increased entry, productivity, and specialization of independent inventors. As the railroad network expanded, it further led to the emergence of a national market for ideas: inventors in connected areas began to develop ideas with applications outside the local economy, which were subsequently sold to firms along the network. Our findings suggest that the reduced interaction cost between firms, intermediaries, and inventors was a key driver of the historical emergence of a market for ideas.

Keywords: Technological Change, Infrastructure;, Innovation

JEL Classification: O30, N70, O33

Suggested Citation

Andersson, David and Berger, Thor and Prawitz, Erik, Making a Market: Infrastructure, Integration, and the Rise of Innovation (February 18, 2020). IFN Working Paper No. 1319, Available at SSRN: https://ssrn.com/abstract=3540253 or http://dx.doi.org/10.2139/ssrn.3540253

David Andersson

Uppsala University ( email )

Box 513
Uppsala, SE-751 20
Sweden

Thor Berger

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Erik Prawitz (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

HOME PAGE: http://sites.google.com/site/erikprawitz/

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