Is geographic nearness important for trading ideas? Evidence from the US
- 480 Downloads
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.
KeywordsPatent transactions Citations Knowledge flows Localization Distance
JEL ClassificationF10 F23 O33
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.
- Anton, J., & Yao, D. (1994). Expropriation and inventions: Appropriable rents in the absence of property rights. American Economic Review, 84(1), 190–209.Google Scholar
- Arrow, K. (1962). Economic welfare and the allocation of resources for invention. In: The rate and direction of inventive activity (pp. 609–625). Princeton: Princeton University Press.Google Scholar
- Audretsch, D. B., & Feldman, M. P. (1996). R&d spillovers and the geography of innovation and production. The American Economic Review, 86(3), 630–640.Google Scholar
- Belenzon, S., & Schankerman, M. (2011). Spreading the word: Geography, policy and knowledge spillovers. CEPR Discussion Paper No. 8002, Forthcoming in Review of Economics and Statistics.Google Scholar
- Breschi, S., Lissoni, F. (2004). Knowledge networks from patent data: Methodological issues and research targets. Centre for Knowledge, Internationalization and Technology Studies, University of Bocconi, KITeS Working Papers No. 150.Google Scholar
- Gawer, A., & Cusumano, M. (2002). Platform leadership: How intel, palm, cisco and others drive industry innovation. Cambridge, MA: Harvard Business School Press.Google Scholar
- Hall, B., Jaffe, A., & Trajtenberg, M. (2001). The nber patents citations data file: Lessons, insights and methodological tools. NBER Working Paper No. 8498.Google Scholar
- Holmes, T., & Stevens, J. (2004). Spatial distribution of economic activities in North America. In J. Vernon Henderson & Jacques-François Thisse (Eds.), Hand book of urban and regional economics: Cities and geography. Amsterdam: Elsevier.Google Scholar
- Krugman, P. (1991). Geography and trade. Cambridge: MIT Press.Google Scholar
- Lai, R., Amour, A.D., Yu, A., Sun, Y., Torvik, V., Fleming, L. (2011). Disambiguation and co-authorship networks of the U.S. patent inventor database (1975–2010). http://hdl.handle.net/1902.1/15705 UNF:5:9kQaFvALs6qcuoy9Yd8uOw== V1 [Version].
- Li, Y. (2009). Borders and distance in knowledge flows: Dying over time or dying with age? Evidence from patent citations. CESifo Working Paper Series No. 2625.Google Scholar
- Mowery, D., & Ziedonis, A. (2001). The geographic reach of market and non-market channels of technology transfer: Comparing citations and licences of university patents. NBER Working Paper No. 8568.Google Scholar
- Saxenian, A. (1994). Regional advantage: Culture and competition in Silicon Valley and Route 128. Cambridge, MA: Harvard University Press.Google Scholar
- Serrano, C. (2011). Estimating the gains from trade in the market for innovation: Evidence from the transfer of patents. NBER Working Paper No. 17304.Google Scholar
- Stanford Report. (2004). Intellectual property the next big thing, Stanford Report, March 3. Stanford University.Google Scholar
- WIPO. (2004). Intellectual property: A power tool for economic growth. World Intellectual Property Organization.Google Scholar