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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. 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.
  2. Head, Keith & Mayer, Thierry & Ries, John, 2007. "How Remote is the Offshoring Threat?," CEPR Discussion Papers 6542, C.E.P.R. Discussion Papers.
  3. Coe, David T. & Helpman, Elhanan, 1995. "International R&D spillovers," European Economic Review, Elsevier, vol. 39(5), pages 859-887, May.
  4. Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1992. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," NBER Working Papers 3993, National Bureau of Economic Research, Inc.
  5. Carolyn L. Evans & James Harrigan, 2003. "Distance, Time, and Specialization," NBER Working Papers 9729, National Bureau of Economic Research, Inc.
  6. 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.
  7. Keller, W., 1996. "Are International R&D Spillovers Trade-Related? Analyzing Spillovers Among Randomly Matched Trade Partners," Working papers 9607, Wisconsin Madison - Social Systems.
  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. Ariel Pakes, 1986. "Patents as Options: Some Estimates of the Value of Holding European Patent Stocks," NBER Working Papers 1340, National Bureau of Economic Research, Inc.
  10. Zvi Griliches, 1991. "The Search for R&D Spillovers," NBER Working Papers 3768, National Bureau of Economic Research, Inc.
  11. Rachel Griffith & Stephen Redding & John Van Reenen, 2000. "Mapping the Two Faces of R&D: Productivity Growth in a Panel of OECD Industries," CEP Discussion Papers dp0458, Centre for Economic Performance, LSE.
  12. Hall, B. & Jaffe, A. & Trajtenberg, M., 2001. "The NBER Patent Citations Data File: Lessons, Insights and Methodological Tools," Papers 2001-29, Tel Aviv.
  13. Ridder, G. & Tunali, I., 1997. "Stratified Partial Likelihood Estimation," Papers 1997/17, Koc University.
  14. Adam Jaffe & Manuel Trajtenberg, 1999. "International Knowledge Flows: Evidence From Patent Citations," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 8(1-2), pages 105-136.
  15. Sokbae 'Simon' Lee, 2003. "Estimating panel data duration models with censored data," CeMMAP working papers CWP13/03, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  16. Horowitz, Joel L. & Lee, Sokbae, 2004. "Semiparametric estimation of a panel data proportional hazards model with fixed effects," Journal of Econometrics, Elsevier, vol. 119(1), pages 155-198, March.
  17. Peter Thompson, 2006. "Patent Citations and the Geography of Knowledge Spillovers: Evidence from Inventor- and Examiner-added Citations," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 383-388, May.
  18. Peter Thompson, 2004. "Patent Citations and the Geography of Knowledge Spillovers: Evidence from Inventor- and Examiner-Added Citations," Working Papers 0405, Florida International University, Department of Economics, revised Jun 2005.
  19. 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.
  20. Griffith, Rachel & Harrison, Rupert & Van Reenen, John, 2004. "How Special is the Special Relationship? Using the Impact of US R&D Spillovers on UK Firms as a Test of Technology Sourcing," CEPR Discussion Papers 4698, C.E.P.R. Discussion Papers.
  21. Wooldridge, Jeffrey M., 2007. "Inverse probability weighted estimation for general missing data problems," Journal of Econometrics, Elsevier, vol. 141(2), pages 1281-1301, December.
  22. Jeffrey I. Bernstein & Pierre Mohnen, 1994. "International R&D Spillovers Between U.S. and Japanese R&D Intensive Sectors," NBER Working Papers 4682, National Bureau of Economic Research, Inc.
  23. Peter Thompson & Melanie Fox Kean, 2004. "Patent Citations and the Geography of Knowledge Spillovers: A Reassessment," Working Papers 0401, Florida International University, Department of Economics.
  24. Peter Thompson & Melanie Fox-Kean, 2005. "Patent Citations and the Geography of Knowledge Spillovers: A Reassessment," American Economic Review, American Economic Association, vol. 95(1), pages 450-460, March.
  25. 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.
  26. Adair Morse, 2006. "Are elite universities losing their competitive edge?," Proceedings, Federal Reserve Bank of Cleveland.
  27. 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.
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