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

  • Rachel Griffith
  • Sokbae Lee
  • John Van Reenen

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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File URL: http://eprints.lse.ac.uk/19695/
File Function: Open access version.
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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 19695.

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Length: 50 pages
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:ehl:lserod:19695
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Web page: http://www.lse.ac.uk/

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  1. Bernstein, Jeffrey I. & Mohnen, Pierre, 1994. "International R&D Spillovers Between U.S. and Japanese R&D Intensive Sectors," Working Papers 94-20, C.V. Starr Center for Applied Economics, New York University.
  2. Rachel Griffith & Stephen Redding & John Van Reenen, 2004. "Mapping the Two Faces of R&D: Productivity Growth in a Panel of OECD Industries," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 883-895, November.
  3. Carolyn L. Evans & James Harrigan, 2003. "Distance, Time, and Specialization," NBER Working Papers 9729, National Bureau of Economic Research, Inc.
  4. David T. Coe & Elhanan Helpman, 1993. "International R&D Spillovers," NBER Working Papers 4444, National Bureau of Economic Research, Inc.
  5. Jaffe, A.B. & Trajtenberg, M., 1992. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," Papers 14-92, Tel Aviv.
  6. Lee G. Branstetter & Mariko Sakakibara, 2002. "When Do Research Consortia Work Well and Why? Evidence from Japanese Panel Data," American Economic Review, American Economic Association, vol. 92(1), pages 143-159, March.
  7. Griliches, Zvi, 1992. " The Search for R&D Spillovers," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages S29-47, Supplemen.
  8. 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.
  9. Wolfgang Keller, 1997. "Are International R&D Spillovers Trade-Related? Analyzing Spillovers Among Randomly Matched Trade Partners," NBER Working Papers 6065, National Bureau of Economic Research, Inc.
  10. Bronwyn H. Hall & Adam Jaffe & Manuel Trajtenberg, 2005. "Market Value and Patent Citations," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 16-38, Spring.
  11. Keith Head & Thierry Mayer & John Ries, 2008. "How Remote is the Offshoring Threat ?," Sciences Po publications info:hdl:2441/10143, Sciences Po.
  12. Joel L. Horowitz & Sokbae Lee, 2002. "Semiparametric Estimation of a Panel Data Proportional Hazards Model with Fixed Effects," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 A5-3, International Conferences on Panel Data.
  13. Jaffe, A.B. & Trajtenberg, M., 1998. "International Knowledge Flows: Evidence from Patent Citation," Papers 11-98, Tel Aviv.
  14. Rachel Griffith & Rupert Harrison & John Van Reenen, 2004. "How special is the special relationship? Using the impact of US R&D spillovers on UK firms as a test of technology sourcing," IFS Working Papers W04/32, Institute for Fiscal Studies.
  15. Carolyn L. Evans & James Harrigan, 2005. "Distance, Time, and Specialization: Lean Retailing in General Equilibrium," American Economic Review, American Economic Association, vol. 95(1), pages 292-313, March.
  16. Lee, Sokbae, 2008. "Estimating Panel Data Duration Models With Censored Data," Econometric Theory, Cambridge University Press, vol. 24(05), pages 1254-1276, October.
  17. Ariel Pakes, 1984. "Patents as Options: Some Estimates of the Value of Holding European Patent Stocks," NBER Working Papers 1340, National Bureau of Economic Research, Inc.
  18. repec:fiu:wpaper:0405 is not listed on IDEAS
  19. Jeffrey M. Wooldridge, 2004. "Inverse probability weighted estimation for general missing data problems," CeMMAP working papers CWP05/04, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  20. repec:fiu:wpaper:0401 is not listed on IDEAS
  21. Ridder, Geert & Tunali, Insan, 1999. "Stratified partial likelihood estimation," Journal of Econometrics, Elsevier, vol. 92(2), pages 193-232, October.
  22. Branstetter, Lee G., 2001. "Are knowledge spillovers international or intranational in scope?: Microeconometric evidence from the U.S. and Japan," Journal of International Economics, Elsevier, vol. 53(1), pages 53-79, February.
  23. Nicholas Bloom & John Van Reenen, 2000. "Patents, productivity and market value: evidence from a panel of UK firms," IFS Working Papers W00/21, Institute for Fiscal Studies.
  24. Bronwyn H. Hall & Adam B. Jaffe & Manuel Trajtenberg, 2001. "The NBER Patent Citation Data File: Lessons, Insights and Methodological Tools," NBER Working Papers 8498, National Bureau of Economic Research, Inc.
  25. Adair Morse, 2006. "Are elite universities losing their competitive edge?," Proceedings, Federal Reserve Bank of Cleveland.
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