Dynamic Oder and Institution

Abstract

It is the purpose of this essay to analyze the relation between dynamic oder that concerns knowledge allocatiion in the economic process on the assumption of the contemporary market economy and the role of institutions and policies. Ttraditionaly in the most of economic literatures, morket oder that concerns resource allocation is regarded as main economic system. However, our dynamic oder concerns innovative activity that contains innovation and diffusion of a new technologies. Our dynamic oder is drived by the differential probabilities between firms that are determined by technological paradigms and technological asymmetries. Innovative activities are leaded by the firms recognizeing heigh probabilities, another firms in same sector imitate that innovation, and finaly cruster of the new technologies is formed. In the working of the dynamic process, many institutions concern the performance of dynamic oder. For instance, bridging institution plays assimilating flow knowledge to the knowledge bases of firmes, and forms the bases of differential probabilities. Patenting institution, employment institution and the institutions concerning focussing mechanism are another importance institutions.