Competition, cooperation, and the neighboring farmer effect |
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Authors: | Serguey Braguinsky David C. Rose |
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Affiliation: | aDepartment of Social and Decision Sciences, Carnegie Mellon University, 5000 Forbes Avenue, Pittsburgh, PA 15213, United States;bDepartment of Economics, University of Missouri-St. Louis, 1000 University Drive, St. Louis, MO 62131, United States |
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Abstract: | In this paper we propose a model that explains how cooperation can emerge spontaneously between firms in a highly competitive market environment. The basic idea is that the more competitive is the market, the less costly it is for firms to help each other like good neighbors. Cooperation takes the form of sharing technical know-how, which speeds up the adoption of new technologies (normally developed elsewhere) that spur industrial development. The model comports with the development history of Japan's first example of successful industrial development – its cotton spinning industry – whose conditions match those of firms in small open economies today. |
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Keywords: | Competition Cooperation Collective invention Technology adoption Technical know-how Infant industry development Small open economies Less developed countries |
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