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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://www.nber.org/papers/w13338.pdf
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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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Publication status: published as Rachel Griffith & Sokbae Lee & John Van Reenen, 2011. "Is distance dying at last? Falling home bias in fixed‐effects models of patent citations," Quantitative Economics, Econometric Society, vol. 2(2), pages 211-249, 07.
Handle: RePEc:nbr:nberwo:13338
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