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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
Note: LS PR
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  1. James Harrigan & Carolyn Evans, 2004. "Distance, Time and Specialization," Econometric Society 2004 North American Winter Meetings 640, Econometric Society.
  2. 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.
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  13. Wolfgang Keller, 1996. "Are International R&D Spillovers Trade-related? Analyzing Spillovers among Randomly Matched Trade Partners," International Trade 9608002, EconWPA.
  14. 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.
  15. repec:fiu:wpaper:0405 is not listed on IDEAS
  16. 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.
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  19. repec:fiu:wpaper:0401 is not listed on IDEAS
  20. Ridder, Geert & Tunali, Insan, 1999. "Stratified partial likelihood estimation," Journal of Econometrics, Elsevier, vol. 92(2), pages 193-232, October.
  21. 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.
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  24. 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.
  25. 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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