DP7928 Spillovers in Space: Does Geography Matter?

Author(s): Sergey Lychagin, Joris Pinkse, Margaret E. Slade, John Van Reenen
Publication Date: July 2010
Keyword(s): geographic proximity, R&D spillovers, semiparametric, technological proximity
JEL(s): C23, L60, O33
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=7928

We simultaneously assess the contributions to productivity of three sources of research and development spillovers: geographic, technology and product?market proximity. To do this, we construct a new measure of geographic proximity that is based on the distribution of a firm?s inventor locations rather than its headquarters, and we report both parametric and semiparametric estimates of our geographic?distance functions. We find that: i) Geographic space matters even after conditioning on horizontal and technological spillovers; ii) Technological proximity matters; iii) Product?market proximity is less important; iv) Locations of researchers are more important than headquarters but both have explanatory power; and v) Geographic markets are very local.