Is Distance Dying at Last? Falling Home Bias in Fixed Effects Models of Patent Citations

Rachel Griffith (), Sokbae (Simon) Lee () and John van Reenen ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: We examine the "home bias" of international knowledge spillovers as measured by the speedof patent citations (i.e. knowledge spreads slowly over international boundaries). We presentthe first compelling econometric evidence that the geographical localization of knowledgespillovers has fallen over time, as we would expect from the dramatic fall in communicationand travel costs. Our proposed estimator controls for correlated fixed effects and censoring induration models and we apply it to data on over two million citations between 1975 and1999. Home bias declines substantially when we control for fixed effects: there is practicallyno home bias for the more "modern" sectors such as pharmaceuticals andinformation/communication technologies.

Keywords: Fixed effects; home bias; patent citations; knowledge spillovers (search for similar items in EconPapers)
JEL-codes: O32 O33 F23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ino, nep-ipr, nep-knm and nep-sog
Date: Written
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Related works:
Working Paper: Is Distance Dying at Last? Falling Home Bias in Fixed Effects Models of Patent Citations (2007)
Working Paper: Is Distance Dying at Last? Falling Home Bias in Fixed Effects Models of Patent Citations (2007)
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