Knowledge Input as a Productıon Factor and the Competıng Power
Abstract
Knowledge argued as a production factor, and human capital considered as the major determining component of the created ideas or innovations that the approaches empowered from the endogenous growth theory and the recent growth models. Marginal revenue of knowledge factor contemplated higher than the ones conventional inputs of capital and labour, under the assumption of having been increasing rate of return. This feature of knowledge input, via allowing the increasing scale effect, makes it’s function crucial for the economic agencies to the means of gaining the competitive advantage and achieving higher economic growth rates. This, together with the assumption of the higher demand elasticity of income to the innovated goods which is suppose to be effective , ensures that the “substitution elasticity of knowledge input to capital” becomes bigger than unity in the long run. When the knowledge input taken into consideration as the production factor, “there might be the factor market for the human capital”, as the major determiner, in which the market equation, apart from the labour market in conventional terms, would be determined with the interaction of supply and demand conditions. The paper reviews the innovation process, and the cost and return to the human capital with respect to the knowledge or human capital market equilibrium, and discuss the effectcs on competition.