Economic Analysis Of Knowledge Production

Knowledge problem has been brought forward by two facets: firstly, modern development of knowledge production and knowledge commerce, such as research and development, education, intellectual property rights, shows us a new type of productivity; secondly, all fruits of economics during 20th century told us that the source of economy growth and development is knowledge which is outside of economics. All efforts before this dissertation to solve knowledge problem were based on the same method which thought of knowledge as one of many factors of productivity and production (substantial production), yet they ended with little success.This dissertation is also dedicated to solve knowledge problem in a new way, not following others' thought path. My new way can be called "knowledge production theory", while others' should be called "knowledge is only one factors (many) of productivity".This study begins with the elaboration of knowledge and knowledge activity. The most important thing is that knowledge activity today has been the producing course, which marks the difference between modern society and former one. When knowledge production takes the form of commodity and is traded in market, we can study it thoroughly now. The new cost curve, including marginal cost (constant and very low ), average cost ( the right branch of hyperbola ) and total cost, accompanied with the innovation cost (constant and very high), which were all put forward by the author of this dissertation, sets the foundation for the original theory in this paper. Demand-cost analysis shows that knowledge production must produce residual for society, including customer residual and profit of producer. Behind this is the continuously falling price, which helps to create an extensive, even whole crowd, market. So, mechanism of growth or development is found out.Furthermore, the framework can be expanded to industrial organization analysis and macro-economy, discussing the developing strategy, macro-policy, regulation, etc. During the process of transition to knowledge economy, the core of policies should be changed from keeping the fixed aim, which is based on equilibrium analysis, to promoting innovation, which is deduced from knowledge production theory. At the same process, regulation must be based on intellectual property right protection. Moreover, discussion of such elementary questions as concept of economics, institution analysis, value theory, history, is also included.