This paper analyzes a decentralized process for the diffusion of knowledge. In equilibrium, the economy converges from an initial distribution of knowledge over agents to the steady-state distribution, which is unique. Because of the public good aspect of information, too little learning takes...

This paper explores a model of innovation and spatial co mpetition over time. A key implication of the paper is that firms' size is posit ively autocorrelated across time. The mechanism that generates this persistence works only in heterogenous product markets and is based on the idea that...

This article investigates the ability of the price system to aggregate private information in a market of uncertai n size and where set-up costs are incurred by entrants. It is shown t hat the equilibrium is random even when the totality of private infor mation is so large that aggregate...

We explore entry into a foreign market with uncertain demand growth. A multinational can serve the foreign demand by two modes, or by a combination thereof: it can export its products, or it can create productive capacity via foreign direct investment (FDI). The advantage of FDI is that it...

A competitive, dynamic model of entry into a new industry is set up and both its positive and normative aspects are studied. The main assumptions are that entry is sequential, that it occurs under imperfect information on the size of the market, and that better information becomes available as...

We explore entry into a foreign market with uncertain demand growth. A multinational can serve the foreign demand by two modes, or by a combination thereof: it can export its products, or it can create productive capacity via foreign direct investment (FDI). The advantage of FDI is that it...

Labor mobility may be caused by shifts in the derived demand for labor on the part of firms or s ectors, or it may be caused by mismatches between workers and their j obs. Both reasons may be important, and this paper merges them into o ne model. It explores the consequences for (1) wage-tenure...

I estimate a model in which new technology entails random adjustment needs. Rapid adjustments may cause measured productivity to decline. The slow-downs persist because adjustment is costly, and hence protracted. The model explains both the “steepness” and the “deepness” asymmetry of...

Motivated by the observed rise in the trade of technology, I analyse how technology would spread in a frictionless market. In such a world, low-skilled agents prefer to use old technology because it costs less; their skills do not justify the use of frontier technology. The model generates a...