Geographic Localisation of Knowledge Spillovers: Evidence from High-Tech Patent Citations in Europe

Abstract

The focus in this paper is on knowledge spillovers between hightechnology firms in Europe, as captured by patent citations. The European coverage is given by patent applications at the European Patent Office (EPO) that are assigned to high-technology firms located in Europe. By following the paper trail left by citations between high-technology patents we adopt a case–control matching approach to test the extent of localisation of knowledge spillovers at two geographic levels, the region and the country level. This approach views a finding of disproportionate co-location of patent citations relative to co-located control patents as evidence of localised knowledge spillovers. To disentangle border from geographic distance effects the paper adopts a Poisson spatial interaction modelling perspective. The findings of the study not only indicate that localisation of knowledge spillovers exists, but also that national border effects are more important than geographical distance effects. Thus, knowledge flows within European countries more easily than across. Not only geography matters, but also technological proximity. Interregional knowledge flows are industry specific and occur most often between regions located close to each other in technological space.

JEL Classification: O31, C21, R15, O52