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Innovation without Borders? The Geography of Technological Diffusion

Author

Listed:
  • Ursel Baumann
  • Zoë B. Cullen
  • Ester Faia
  • Annalisa Ferrando
  • Ricardo Perez-Truglia
  • Judit Rariga

Abstract

How well does innovation diffuse across geographic boundaries? To shed light on this question, we present a large-scale field experiment involving 3,300 firms across twelve European Union countries. We elicit firms' perceptions of the share of similar firms in their own country that had invested in artificial intelligence (AI), as well as the corresponding share among similar firms in Germany, France, and Italy. We randomly provide half of the sample with accurate information about both domestic and foreign AI investment. We show that firms substantially underestimate competitors' current AI investment, both domestically and abroad, and that they update their expectations about competitors' future AI investment in response to the information treatment. The treatment also causes a statistically significant increase in firms' own expected AI investment rate (p-value

Suggested Citation

  • Ursel Baumann & Zoë B. Cullen & Ester Faia & Annalisa Ferrando & Ricardo Perez-Truglia & Judit Rariga, 2026. "Innovation without Borders? The Geography of Technological Diffusion," NBER Working Papers 35314, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:35314
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    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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