Technology Information Sharing

This chapter is in the spirit of (Marshall, Principles of economics, MacMillan, 1920), who raised the question of how economic distanceEconomic distance affects a firm’s productivity, focusing on the role of idea sharingIdea sharing in relation to technological knowledge or information between firms. In order to quantify the degree of knowledge spillover or information sharing, we take the production functionProduction function approach. Assuming core-periphery structure around automobile assemblies surrounded with auto-parts suppliersAuto-parts supplier(s), we estimate plant-level production functionsProduction function of Japanese auto-parts suppliersJapanese auto-parts supplier(s), where the productivity function depends upon the degree of information sharing measured by both geographical plant location and membership of technological cooperation associationsTechnological cooperation association(s). We consider econometric issues of cross-sectional dependenceCross-sectional dependence of productivity and a simultaneitySimultaneity problem between inputs, applying methods to the standard ordinary least squares and generalized method of moments estimators. Positive technological externalitiesTechnological externalities (externality) are seen in general and for independent plants, which is robust to specifications of the production functionsProduction function. AgglomerationAgglomeration effects are, however, rarely observed for relation-specific or cooperative plants. Some of them cost substantial negative externalities. Once a simultaneitySimultaneity problem is econometrically considered, instead of increasing returns, decreasing returns to scale emerge in case of total materials. AgglomerationAgglomeration, if any, could be brought about not by increasing returns to scale, but by productivity spillover among suppliers proximate to automobile assemblies.