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.