The Economics of Knowledge

comprehensive treatment of the economics of
knowledge, focusing on its emergence as a discipline in a period
of technological transformation.

The economics of knowledge is a rapidly emerging subdiscipline of economics that has never before been given the comprehensive and cohesive treatment found in this book. Dominique Foray analyzes the deep conceptual and structural transformation of our economic activities that has led to a gradual shift to knowledge-intensive activities. This transformation is the result of the collision of a longstanding trend -- the expansion of knowledge-based investments and activities -- with a technological revolution that radically altered the production and transmission of knowledge and information. The book focuses on the dual nature of the economics of knowledge: its emergence as a discipline (which Foray calls 'the economics of knowledge') and the historical development of a particular period in the growth and organization of economic activities ('the knowledge-based economy').

The book, which alternates between analysis of the economic transformation and examination of the tools and concepts of the discipline, begins by discussing 'knowledge' as an economic good and the historical development of the knowledge-based economies. It then develops a conceptual framework for considering the issues raised. Topics considered in the remaining chapters include forms of knowledge production, codification and infusion, incentives and institutions for the efficient production of knowledge (including discussions of private markets and 'open' sources), and knowledge management as a new organizational capability. Finally, the book addresses policy concerns suggested by the uneven development of knowledge across different sectors and by the need to find ways of reclaiming the public dimension of knowledge from an essentially privatized knowledge revolution.

Review text:

'Despite frequent reference to the knowledge-based economy, there is little common understanding about what makes it work and how knowledge differs from conventional economic resources. In The Economics of Knowledge, Dominique Foray gives us a rich, pioneering account of the special economic characteristics of knowledge, how they challenge business management and strategy, and, especially important, implications for public policies toward education, research, and intellectual property.'

--Brian Kahin, Visiting Professor, University of Michigan, former Senior Policy Analyst, White House Office of Science and Technology Policy

'Dominique Foray is to be congratulated for producing the first full-blown text on the economics of knowledge. This wide ranging, interesting, and valuable book will surely be the touchstone by which other studies are judged. Foray focuses hard on knowledge itself, not information or data, and by doing so has produced an original and much needed study.'

--Larry Prusak, Distinguished Scholar, Babson College

'Foray has put together a masterly and much-needed book on the economics of knowledge that brings in ideas from law, management, and sociology. The result is a definitive and overarching statement of what we know and where we next need to go.'

--Danny Quah, Professor of Economics, London School of Economics and Political Science

'This is a very important and creative book, in which Foray makes a strong case that the economics of knowledge is an important discipline in microeconomics. He synthesizes several strains of research to create a clear vision of a general scientific program in that field, and identifies a core of hypotheses (that knowledge is a public good, that learning-by-doing is a joint product) as important to further progress. He also articulates a central objective for the discipline: To understand the functioning of socioeconomic institutions that can be relied upon to produce and use knowledge efficiently.'

--Eric von Hippel, Sloan School of Management, MIT