Open AccessIs distance dying at last? Falling home bias in fixed‐effects models of patent citations
Author(s) -
Griffith Rachel,
Lee Sokbae,
Van Reenen John
Publication year - 2011
Publication title -
quantitative economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.062
H-Index - 27
eISSN - 1759-7331
pISSN - 1759-7323
DOI - 10.3982/qe59
Subject(s) - censoring (clinical trials) , estimator , economics , externality , economies of agglomeration , econometrics , demographic economics , fixed effects model , falling (accident) , panel data , statistics , microeconomics , medicine , mathematics , environmental health
We examine the “home bias” of knowledge spillovers (the idea that knowledge spreads more slowly over international boundaries than within them) as measured by the speed of patent citations. We present econometric evidence that the geographical localization of knowledge spillovers has fallen over time, as we would expect from the dramatic fall in communication and travel costs. Our proposed estimator controls for correlated fixed effects and censoring in duration models, and we apply it to data on over two million patent citations between 1975 and 1999. Home bias is exaggerated in models that do not control for fixed effects. The fall in home bias over time is weaker for the pharmaceuticals and information/communication technology sectors where agglomeration externalities may remain strong.