Public & Private Spillovers, Location and the Productivity of Pharmaceutical Research

35 Pages Posted: 19 Sep 2006 Last revised: 20 Sep 2014

See all articles by Jeffrey L. Furman

Jeffrey L. Furman

Boston University - Department of Strategy & Policy; National Bureau of Economic Research (NBER)

Margaret Kyle

University of Toulouse 1 - Toulouse School of Economics (TSE)

Margaret K. Kyle

London Business School; National Bureau of Economic Research (NBER)

Iain M. Cockburn

Boston University Questrom School of Business; National Bureau of Economic Research (NBER)

Rebecca M. Henderson

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Date Written: September 2006

Abstract

While there is widespread agreement among economists and management scholars that knowledge spillovers exist and have important economic consequences, researchers know substantially less about the "micro mechanisms" of spillovers -- about the degree to which they are geographically localized, for example, or about the degree to which spillovers from public institutions are qualitatively different from those from privately owned firms (Jaffe, 1986; Krugman, 1991; Jaffe et al., 1993; Porter, 1990). In this paper we make use of the geographic distribution of the research activities of major global pharmaceutical firms to explore the extent to which knowledge spills over from proximate private and public institutions. Our data and empirical approach allow us to make advances on two dimensions. First, by focusing on spillovers in research productivity (as opposed to manufacturing productivity), we build closely on the theoretical literature on spillovers that suggests that knowledge externalities are likely to have the most immediate impact on the production of ideas (Romer, 1986; Aghion & Howitt, 1997). Second, our data allow us to distinguish spillovers from public research from spillovers from private, or competitively funded research, and to more deeply explore the role that institutions and geographic proximity play in driving knowledge spillovers.

Suggested Citation

Furman, Jeffrey L. and Kyle, Margaret and Kyle, Margaret K. and Cockburn, Iain M. and Henderson, Rebecca M., Public & Private Spillovers, Location and the Productivity of Pharmaceutical Research (September 2006). NBER Working Paper No. w12509. Available at SSRN: https://ssrn.com/abstract=930328

Jeffrey L. Furman (Contact Author)

Boston University - Department of Strategy & Policy ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
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United States

Margaret Kyle

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

Margaret K. Kyle

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Iain M. Cockburn

Boston University Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States
617-353-3775 (Phone)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Rebecca M. Henderson

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

E52-543
Cambridge, MA 02142
United States
617-253-6618 (Phone)
617-253-2660 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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