The Limits of Knowledge as a Public Good: A Strategic Approach to Tacit Knowledge

Abstract

In this article, tacit knowledge, which is one of the factors that affects knowledge production and dissemination is examined by using game theory. Information as a public good approach advocates government intervention or intellectual property to achieve Pareto efficiency in information production. Under tacit knowledge, Pareto efficiency can be achieved without any intervention. As argued by researchers such as Joseph Schumpeter and Friedrich Hayek, the entrepreneur‘s function is important in the production and dissemination of tacit knowledge. While discussing the assumptions of approaches that model tacit knowledge, we also summarize the policy implications of them. The article develops a game theoretic framework to understand the nature of tacit knowledge, and provides a strategic perspective to examine the relationships between actors and institutions (universities, firms, and entrepreneurs) involved in knowledge production.