Handbook of Knowledge and Economics
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Handbook of Knowledge and Economics

Edited by Richard Arena, Agnès Festré and Nathalie Lazaric

By illuminating the philosophical roots of the various notions of knowledge employed by economists, this Handbook helps to disentangle conceptual and typological issues surrounding the debate on knowledge amongst economists. Wide-ranging in scope, it explores fundamental aspects of the relationship between knowledge and economics – such as the nature of knowledge, knowledge acquisition and knowledge diffusion.
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Chapter 20: Distributed Knowledge and its Coordination

Markus C. Becker


* Markus C. Becker 20.1 WHAT IS DISTRIBUTED KNOWLEDGE? Consider a small corner-shop bakery. It is owned and operated by one baker, who produces bread in the early morning, and sells it later in the day. In such a case of crafts production, the baker knows everything necessary to produce and market bread. Compare this bakery with a five-person bakery (maybe the same one after considerable growth). The question relevant for understanding distributed knowledge is: how much does the knowledge that each person has differ? In principle, there is a continuum of possibilities, with two end points. (a) All five persons in the bakery hold the same knowledge. For instance, all five know how to bake bread, how to sell bread, and they also know how to make and sell all the different types of bread offered. (b) They all hold different knowledge. One knows how to bake bread, but has never bothered to learn about how to be good at selling it; one is good at selling but does not know how to bake bread and so on. (c) In between these two extremes, there are intermediate forms. Employee A knows very well how to bake bread, but also knows a little bit about selling; employee B knows very well how to sell bread, but also knows a little bit about baking. Focusing on the knowledge held by the actors, the three situations in our examples have the following characteristics. At extreme (a), a multi-person firm is a simple multiplication...

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