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Is distance dying at last? Falling home bias in fixed‐effects models of patent citations

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  • Rachel Griffith
  • Sokbae Lee
  • John Van Reenen

Abstract

We examine the "home bias" of knowledge spillovers (the idea that knowledge spreads more slowly over international boundaries than within them) as measured by the speed of patent citations. We present econometric evidence that the geographical localization of knowledge spillovers has fallen over time, as we would expect from the dramatic fall in communication and travel costs. Our proposed estimator controls for correlated fixed effects and censoring in duration models and we apply it to data on over two million patent citations between 1975 and 1999. Home bias is exaggerated in models that do not control for fixed effects. The fall in home bias over time is weaker for the pharmaceuticals and information/communication technology sectors where agglomeration externalities may remain strong.

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Bibliographic Info

Article provided by Econometric Society in its journal Quantitative Economics.

Volume (Year): 2 (2011)
Issue (Month): 2 (07)
Pages: 211-249

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Handle: RePEc:ecm:quante:v:2:y:2011:i:2:p:211-249

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References

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  1. Adam B. Jaffe & Manuel Trajtenberg, 1998. "International Knowledge Flows: Evidence from Patent Citations," NBER Working Papers 6507, National Bureau of Economic Research, Inc.
  2. Han Kim, E & Morse, Adair & Zingales, Luigi, 2006. "Are Elite Universities Losing their Competitive Edge?," CEPR Discussion Papers 5700, C.E.P.R. Discussion Papers.
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  4. John Van Reenen & Rupert Harrison & Rachel Griffith, 2006. "How Special Is the Special Relationship? Using the Impact of U.S. R&D Spillovers on U.K. Firms as a Test of Technology Sourcing," American Economic Review, American Economic Association, vol. 96(5), pages 1859-1875, December.
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  7. Rachel Griffith & Stephen Redding & John Van Reenen, 2000. "Mapping the two faces of R&D : productivity growth in a panel of OECD industries," LSE Research Online Documents on Economics 784, London School of Economics and Political Science, LSE Library.
  8. Wooldridge, Jeffrey M., 2007. "Inverse probability weighted estimation for general missing data problems," Journal of Econometrics, Elsevier, vol. 141(2), pages 1281-1301, December.
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