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Localized knowledge spillovers and patent citations: A distance-based approach

  • Yasusada Murata

    (Advanced Research Institute for the Sciences and Humanities, Nihon University)

  • Ryo Nakajima

    (Department of Economics, Yokohama National University)

  • Ryosuke Okamoto

    (National Graduate Institute for Policy Studies)

  • Ryuichi Tamura

    (Graduate School of Humanities and Social Sciences, University of Tsukuba)

The existence of localized knowledge spillovers found by Jaffe, Trajtenberg and Henderson (1993) has recently been challenged by Thompson and Fox-Kean (2005). To settle this debate, we develop a new approach by incorporating their concepts of control patents into the distance-based test of localization (Duranton and Overman, 2005). Using microgeographic data, we identify localization distance for each technology class while allowing for cross-boundary spillovers, unlike the existing literature where localization is detected at the state or metropolitan statistical area level. We find solid evidence supporting localized knowledge spillovers even when finer controls are used. We further relax the commonly made assumption of perfect controls, and show that the majority of technology classes exhibit localization unless hidden biases induced by imperfect controls are extremely large.

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Paper provided by National Graduate Institute for Policy Studies in its series GRIPS Discussion Papers with number 11-11.

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Length: 42 pages
Date of creation: Sep 2011
Date of revision:
Handle: RePEc:ngi:dpaper:11-11
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  1. Combes, Pierre-Philippe & Duranton, Gilles, 2006. "Labour pooling, labour poaching, and spatial clustering," Regional Science and Urban Economics, Elsevier, vol. 36(1), pages 1-28, January.
  2. Glenn Ellison & Edward L. Glaeser & William R. Kerr, 2010. "What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns," American Economic Review, American Economic Association, vol. 100(3), pages 1195-1213, June.
  3. 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.
  4. Desmet, Klaus & Rossi-Hansberg, Esteban, 2009. "Spatial Development," CEPR Discussion Papers 7479, C.E.P.R. Discussion Papers.
  5. Agrawal, Ajay & Cockburn, Iain & Rosell, Carlos, 2010. "Not Invented Here? Innovation in company towns," Journal of Urban Economics, Elsevier, vol. 67(1), pages 78-89, January.
  6. William R. Kerr & Scott Duke Kominers, 2010. "Agglomerative Forces and Cluster Shapes," NBER Working Papers 16639, National Bureau of Economic Research, Inc.
  7. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2005. "Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 151-184, February.
  8. 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.
  9. Ryo Nakajima & Ryuichi Tamura & Nobuyuki Hanaki, 2009. "The Effect of Collaboration Network on Inventors' Job Match, Productivity and Tenure," Tsukuba Economics Working Papers 2009-001, Economics, Graduate School of Humanities and Social Sciences, University of Tsukuba.
  10. Peter Thompson & Melanie Fox-Kean, 2005. "Patent Citations and the Geography of Knowledge Spillovers: A Reassessment: Reply," American Economic Review, American Economic Association, vol. 95(1), pages 465-466, March.
  11. Agrawal, Ajay & Kapur, Devesh & McHale, John, 2008. "How do spatial and social proximity influence knowledge flows? Evidence from patent data," Journal of Urban Economics, Elsevier, vol. 64(2), pages 258-269, September.
  12. Duranton, Gilles & Martin, Philippe & Mayer, Thierry & Mayneris, Florian, 2010. "The Economics of Clusters: Lessons from the French Experience," OUP Catalogue, Oxford University Press, number 9780199592203, July.
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