The Percolation of Knowledge across Space

Pierre Cotterlaz () and Arthur Guillouzouic
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Pierre Cotterlaz: CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique
Arthur Guillouzouic: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, IPP - Institut des politiques publiques, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique

PSE-Ecole d'économie de Paris (Postprint) from HAL

Abstract: This paper shows that the negative effect of geographical distance on knowledge flows stems from how firms gain sources of knowledge through their existing network. We start by documenting two stylized facts. First, in aggregate, the distance elasticity of patent citations flows is sizable and has remained constant since the 1980s, despite the rise of the internet. Second, at the micro level, firms' network of knowledge sources expands through existing knowledge sources. We introduce a framework featuring the latter phenomenon, and generating a negative distance elasticity in aggregate. The model predicts Pareto-distributed innovator sizes, and citation distances increasing with innovator size. These predictions hold well empirically. We investigate changes of the underlying parameters and geographical composition effects over the period. While the distance effect should have decreased with constant country composition, the rise of East Asian economies, associated to large distance elasticities, compensated lower frictions in other countries.

Keywords: knowledge diffusion; innovation networks; spatial frictions; patent citations (search for similar items in EconPapers)
Date: 2025-01
Note: View the original document on HAL open archive server: https://hal.science/hal-04930949v1
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Published in Journal of International Economics, 2025, 153, pp.104026. ⟨10.1016/j.jinteco.2024.104026⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:hal-04930949

DOI: 10.1016/j.jinteco.2024.104026

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