Collective knowledge communication and innovation: The evidence of technological districts

Technological knowledge is a collective good in that its generation is the result of a process that combines pieces of information and knowledge that are owned by a variety of parties and cannot be traded as such. With low transaction and communication costs technological externalities can fully deploy their effects in terms of increasing returns and positive feedbacks. The conditions and features of communication processes explain the clustering of innovations in well defined regional spaces. Localization in technological districts featured by multichannel communications systems favours access to external knowledge, now viewed as an essential intermediary input in the generation of technological knowledge, and encourages the introduction of localized technological changes, leading to self-reinforcing mechanisms based upon localized increasing returns.