Geographic Constraints on Knowledge Spillovers: Political Borders vs. Spatial Proximity

Abstract:     
Geographic localization of knowledge spillovers is a central tenet in multiple streams of literature. However, empirical studies have examined this phenomenon for only one geographic unit - country, state or metropolitan area - at a time, and have also rarely accounted for spatial distance. We disentangle these geographic effects by using a regression framework based on choice-based sampling to estimate the likelihood of citation between random patents. We find both country and state borders to have independent effects on knowledge diffusion beyond what just geographic proximity in the form of metropolitan collocation or shorter within-region distances can explain. An identification methodology comparing inventor-added and examiner-added citation patterns points to an even stronger role of political borders. The puzzling state border effect remains robust on average across analyses though is found to have waned over time. The country effect has, in contrast, not only remained robust over time but even strengthened.

Number of Pages in PDF File: 36

Keywords: Knowledge Spillovers, Borders, Distance, Economic Geography, Patent Citation, Innovation

JEL Classification: O30, O33, R10, R12

working papers series