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Is Distance Dying at Last? Falling Home Bias in Fixed Effects Models of Patent Citations

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Author Info
Rachel Griffith
Sokbae Lee
John Van Reenen

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Abstract

We examine the home bias of international knowledge spillovers as measured by the speed of patent citations (i.e. knowledge spreads slowly over international boundaries). We present the first compelling 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 citations between 1975 and 1999. Home bias declines substantially when we control for fixed effects: there is practically no home bias for the more modern sectors such as pharmaceuticals and information/communication technologies.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13338.

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Date of creation: Aug 2007
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Handle: RePEc:nbr:nberwo:13338

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Find related papers by JEL classification:
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
O32 - Economic Development, Technological Change, and Growth - - Technological Change - - - Management of Technological Innovation and R&D
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

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  1. Laura Abramovsky & Helen Simpson, 2009. "Geographic proximity and firm-university innovation linkages: evidence from Great Britain," IFS Working Papers W09/03, Institute for Fiscal Studies. [Downloadable!]
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  2. Head, Charles Keith & Mayer, Thierry & Ries, John, 2007. "How Remote is the Offshoring Threat?," CEPR Discussion Papers 6542, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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