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

  • Rachel Griffith


    (Institute for Fiscal Studies and IFS and Manchester)

  • Sokbae Lee


    (Institute for Fiscal Studies and Institute for Fiscal Studies)

  • John Van Reenen

    (Institute for Fiscal Studies)

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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Paper provided by Centre for Microdata Methods and Practice, Institute for Fiscal Studies in its series CeMMAP working papers with number CWP18/11.

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Date of creation: 24 May 2011
Date of revision:
Handle: RePEc:ifs:cemmap:18/11
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  1. Zvi Griliches, 1991. "The Search for R&D Spillovers," NBER Working Papers 3768, National Bureau of Economic Research, Inc.
  2. 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.
  3. Jeffrey Bernstein & Pierre Mohnen, . "International R&D Spillovers Between U.S. and Japanese R&D Intensive Sectors," Carleton Industrial Organization Research Unit (CIORU) 94-04, Carleton University, Department of Economics.
  4. 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.
  5. 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.
  6. Wolfgang Keller, 1996. "Are International R&D Spillovers Trade-related? Analyzing Spillovers among Randomly Matched Trade Partners," International Trade 9608002, EconWPA.
  7. Head, Keith & Mayer, Thierry & Ries, John, 2007. "How Remote is the Offshoring Threat?," CEPR Discussion Papers 6542, C.E.P.R. Discussion Papers.
  8. 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.
  9. Sokbae 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.
  10. 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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  16. Coe, David T & Helpman, Elhanan, 1993. "International R&D Spillovers," CEPR Discussion Papers 840, C.E.P.R. Discussion Papers.
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  18. 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.
  19. Adair Morse, 2006. "Are elite universities losing their competitive edge?," Proceedings, Federal Reserve Bank of Cleveland.
  20. Adam B. Jaffe & Manuel Trajtenberg, 1998. "International Knowledge Flows: Evidence from Patent Citations," NBER Working Papers 6507, National Bureau of Economic Research, Inc.
  21. 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.
  22. 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.
  23. 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.
  24. 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.
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