Innovation without Borders? The Geography of Technological Diffusion

Ursel Baumann, Zoë B. Cullen, Ester Faia, Annalisa Ferrando, Ricardo Perez-Truglia and Judit Rariga

No 35314, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: How well does innovation diffuse across geographic boundaries? To shed light on this question, we present a large-scale field experiment involving 3,300 firms across twelve European Union countries. We elicit firms' perceptions of the share of similar firms in their own country that had invested in artificial intelligence (AI), as well as the corresponding share among similar firms in Germany, France, and Italy. We randomly provide half of the sample with accurate information about both domestic and foreign AI investment. We show that firms substantially underestimate competitors' current AI investment, both domestically and abroad, and that they update their expectations about competitors' future AI investment in response to the information treatment. The treatment also causes a statistically significant increase in firms' own expected AI investment rate (p-value

JEL-codes: C93 D22 L21 O33 (search for similar items in EconPapers)
Date: 2026-06
Note: EFG IFM IO ITI LS PR
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Working Paper: Innovation without Borders? The Geography of Technological Diffusion (2026)
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