The shapes of knowledge spillovers: the AC-KS model

Abstract

Abstract Why do some regions achieve higher levels of economic development while others do not? This paper introduces the Agglomeration-Clustering-Knowledge Spillovers (AC-KS) model, a conceptual framework for better understanding the nature of such differences. We argue that the missing piece of this puzzle is the process by which localized anchors ignite dynamic triangular forces between agglomeration, clustering, and knowledge spillovers, setting in motion a life cycle of first- and second-generation knowledge spillover effects. In this framework, we conceptualize that the spread and positive effects related to knowledge spillovers are governed by the strength-length-completeness triad of the triangularity relationship among agglomeration, clustering, and knowledge spillovers. These interactions then result in conical shapes whose base area and height, respectively, capture decaying effects of geographic reach and local intensity of knowledge-spillover entrepreneurship. The model’s originality lies in its geometric characterization of knowledge spillovers and in integrating fragmented literatures on the relationship among agglomeration, clusters, and knowledge spillovers. Its value is both theoretical and practical: the framework predicts when benefits concentrate or diffuse, offering diagnostic guidance for balancing reach (base) and intensity (height) across the knowledge spillover lifecycle stages of spark, expansion, and decline.