Wednesday October 30, 2013
2:45PM - 4:15PM
S.K. Heninger Professor of Public Policy
Department of Public Policy
"On the benefits of geographical proximity for knowledge spillovers"
Abstract: This paper examines sourcing of knowledge in the inventive process. It develops a model to discern if observed patterns of knowledge sourcing are due to geographic proximity or reflect the geographic location of inventive agents. The empirical test employs observations from an extensive dataset drawn from a survey of European inventors. The identification strategy hinges on the idea that, if proximity matters, a redistribution of knowledge sources near the inventor increases total knowledge spillovers (from near and far sources). In so doing, we separate the effect produced by the geographic distribution of inventive activities from the effect due to geographic proximity. Our empirical analysis also rules out that the observed effect stems from market forces favoring formal collaborations rather than genuine spillovers. We find that proximity matters.