We would like to thank the European Research Council for research grants and the Economic and Social Research Council for its financial support for the Institute for Fiscal Studies, the Centre for Economic Performance, and the Centre for Microdata Methods and Practice. Sharon Belenzon, Richard Freeman, Jerry Hausman, Bruce Meyer, Peter Thompson, seminar participants at Berkeley, Florida International University, and UCL/IFS, a co-editor, and two anonymous referees have offered useful comments.
Is distance dying at last? Falling home bias in fixed-effects models of patent citations
Article first published online: 19 JUL 2011
Copyright © 2011 Rachel Griffith, Sokbae Lee, and John Van Reenen
Volume 2, Issue 2, pages 211–249, July 2011
How to Cite
Griffith, R., Lee, S. and Van Reenen, J. (2011), Is distance dying at last? Falling home bias in fixed-effects models of patent citations. Quantitative Economics, 2: 211–249. doi: 10.3982/QE59
- Issue published online: 19 JUL 2011
- Article first published online: 19 JUL 2011
- Submitted March, 2010. Final version accepted May, 2011.
- Fixed effects;
- home bias;
- patent citations;
- knowledge spillovers
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.