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 tr ansaction and communication costs technological externalities can fully dep loy their effects in terms of increasing returns and positive feedbacks. Th e conditions and features of communication processes explain the clustering of innovations in well defined regional spaces. Localization in technologi cal districts featured by multichannel communications systems favours acces s to external knowledge, now viewed as an essential intermediary input in t he generation of technological knowledge, and encourages the introduction o f localized technological changes, leading to self-reinforcing mechanisms b ased upon localized increasing returns.