The Value of a New Idea: Knowledge Transmission, Workers' Mobility and Market Structure

Chaos, Solitons & Fractals, Vol. 29, No. 3, pp. 697-706

18 Pages Posted: 24 Sep 2009 Last revised: 1 Jul 2011

See all articles by Marco A. Marini

Marco A. Marini

Marco A. Marini; University of Rome La Sapienza

Date Written: January 1, 2005

Abstract

We model the process of knowledge transmission among firms via workers’ mobility as a multi-stage game. In our setup an idea to be realized needs that the agent informed about the idea recruits another agent from a pool of uninformed people. This constraint generates a recursive effect of knowledge transmission via players’ mobility across firms which affects simultaneously the players’ payoffs and the number of active players engaged in market competition. We provide suffcient conditions for the game to possess a unique symmetric subgame perfect equilibrium in which all incumbent players deter the exit of their collaborators. The equilibrium outcome is shown to depend upon the success of the idea over time, expressed by the behaviour of the market demand and on players’ time preferences. A few other intuitions are provided on the interplay between technology, market structure and the market value of an innovative idea.

Keywords: innovation, workers’ mobility, knowledge transmission, subgame perfect nash equilibrium, recursive games

JEL Classification: C7, L2

Suggested Citation

Marini, Marco A., The Value of a New Idea: Knowledge Transmission, Workers' Mobility and Market Structure (January 1, 2005). Chaos, Solitons & Fractals, Vol. 29, No. 3, pp. 697-706, Available at SSRN: https://ssrn.com/abstract=1157414

Marco A. Marini (Contact Author)

Marco A. Marini ( email )

Piazzale Aldo Moro, 5
Roma, 00185
Italy

HOME PAGE: http://sites.google.com/a/uniroma1.it/marcomarini/

University of Rome La Sapienza ( email )

29
Roma, 00185
Italy
+39 06 49910843 (Phone)

HOME PAGE: http://sites.google.com/a/uniroma1.it/marcomarini

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