We argue that incorporating the decision of how to organize the acquisition, use, and communication of knowledge into economic models is essential to understand a wide variety of economic phenomena. We survey the literature that has used knowledge-based hierarchies to study issues like the evolution of wage inequality, the growth and productivity of firms, economic development, the gains from international trade, as well as o§shoring and the formation of international production teams, among many others. We also review the nascent empirical literature that has, so far, conÖrmed the importance of organizational decisions and many of its more salient implications.
Knowledge-based Hierarchies: Using Organizations to Understand the Economy
Submitted by Staff on November 05, 2014
|Date: October 14, 2014|
|Author(s): Luis Garicano, Esteban Rossi-Hansberg|
|Affiliation: LSE-Princeton University|