The Journal of Technology Transfer

, Volume 40, Issue 4, pp 629–662 | Cite as

Is geographic nearness important for trading ideas? Evidence from the US

Article
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Abstract

This paper studies the relative geographic scope of two different channels of knowledge flows, a market channel where knowledge diffuses via patent transactions and a non-market channel where knowledge spillovers operate via patent citations. While there is significant work on informal non-market channels of knowledge diffusion, formal market channels of knowledge transfer are less studied, primarily due to the lack of comprehensive data. Using a newly compiled dataset by the Office of the Chief Economist at the United States Patent and Trademark Office of transactions of US issued patents, we are able to provide novel insights on the spread of patent transaction flows across the states of the US. Our findings support that geographic proximity, in terms of distance and border, matters for the spread of knowledge for both channels; however, it is more essential to the operation of market based (patent trades) than to the operation of non-market based (citations) flows. Although both flows are highly localized, the geographic scope of knowledge flows based on citations is larger than that of traded patents. Intra-sectoral flows are also found to be very localized with Mechanical sector to exhibit the most geographically confined knowledge flows, while flows from information technology sectors, i.e., Electronics and Computers, are the most far reached compared to the knowledge flows from the rest of the sectors, both in the US and abroad. Finally, there is no nuance evidence that the importance of distance has declined over time, either at state or national level for both types of flows.

Keywords

Patent transactions Citations Knowledge flows  Localization Distance 

JEL Classification

F10 F23 O33 
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Notes

Acknowledgments

We are grateful to Stuart Graham, Alan Marco, Kirsten Apple, Saurabh Vishnubhakat, Galen Hancock and the entire staff of the Office of the Chief Economist for their assistance and generous support. We also thank Dietmar Harhoff, Karin Hoisl, and seminar participants at the Center for Advanced Management Studies at Ludwig Maximilian University and at the 7th Annual EPIP Conference for their useful insights. Finally, we appreciate valuable comments provided by Sotiris Karkalakos, Zhen Lei, Timothy Simcoe, Brian D. Wright, and two anonymous referees. Kyriakos Drivas gratefully acknowledges financial support from the National Strategic Reference Framework No: SH1_4083. The usual disclaimer applies.

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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of PiraeusPiraeusGreece

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