Birds of a Feather - Better Together? Exploring the Optimal Spatial Distribution of Ethnic Inventors

35 Pages Posted: 12 Jan 2007 Last revised: 27 Aug 2013

See all articles by Ajay Agrawal

Ajay Agrawal

University of Toronto - Rotman School of Management; National Bureau of Economic Research (NBER)

Devesh Kapur

University of Pennsylvania - Center for the Advanced Study of India; Center for Global Development

John McHale

Smith School of Business

Date Written: January 2007

Abstract

We examine how the spatial and social proximity of inventors affects knowledge flows, focusing especially on how the two forms of proximity interact. We develop a knowledge flow production function (KFPF) as a flexible tool for modeling access to knowledge and show that the optimal spatial concentration of socially proximate inventors in a city or nation depends on whether spatial and social proximity are complements or substitutes in facilitating knowledge flows. We employ patent citation data, using same-MSA and co-ethnicity as proxies for spatial and social proximity, respectively, to estimate the key KFPF parameters. Although co-location and co-ethnicity both predict knowledge flows, the marginal benefit of co-location is significantly less for co-ethnic inventors. These results imply that dispersion of socially proximate individuals is optimal from the perspectives of the city and the economy. In contrast, for socially proximate individuals themselves, spatial concentration is preferred - and the only stable equilibrium.

Suggested Citation

Agrawal, Ajay and Kapur, Devesh and McHale, John, Birds of a Feather - Better Together? Exploring the Optimal Spatial Distribution of Ethnic Inventors (January 2007). NBER Working Paper No. w12823. Available at SSRN: https://ssrn.com/abstract=956862

Ajay Agrawal (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Devesh Kapur

University of Pennsylvania - Center for the Advanced Study of India ( email )

Philadelphia, PA 19104
United States

HOME PAGE: http://www.sas.upenn.edu/casi/about/devesh.html

Center for Global Development

2055 L St. NW
5th floor
Washington, DC 20036
United States

John McHale

Smith School of Business ( email )

99 University Avenue
Goodes Hall
Kingston, Ontario K7L 3N6
Canada

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