The role of universities in the location of innovative start-ups

Start-ups increasingly find the prospect of university–industry collaborations to be a powerful driver of innovation and entrepreneurship activity. Moreover, at the geographical level, they are attracted by teaching and research institutions, either public or private. This paper focuses on the role played by universities. Our hypothesis is that geographical proximity favors the transfer of knowledge and technology from universities to industries and, consequently, represents a positive factor for regional economic development. Results show that university spillovers are positively correlated with the creation of innovative start-ups. Furthermore, the presence of human capital (graduates) exerts a significant influence on the location decisions of start-ups, being a source for competitiveness for firms close to universities. Research quality, especially in the social sciences area, attracts innovative start-ups, while third-mission activities have a weak impact on locational choice.     

In Defense of Factions

We model faction formation in a world where party politicians' objective is the development of an informed program of governance. Politicians' preferences reflect their own views and their information that, when aggregated via intraparty deliberations, influences the party manifesto. By joining a faction, a politician increases the influence of its leader on the manifesto, but foregoes his individual bargaining power. For broad model specifications, we find that a faction formation process allows power to be transferred to moderate politicians. This facilitates information sharing, increasing the capacity of the party to attain its objective. These positive welfare effects may hold even when factionalism restricts intraparty dialogue, and hold a fortiori when information is freely exchanged across factions. We conclude that the existence of ideological factions may benefit a party: It provides a means to tie uninformed or extremist politicians to more moderate and informed faction leaders.