Localized Knowledge Spillovers: Evidence from the Agglomeration of American R&D Labs and Patent Data

Posted: 23 Jan 2015 Last revised: 2 Feb 2018

See all articles by Kristy Buzard

Kristy Buzard

Syracuse University - Department of Economics

Gerald A. Carlino

Federal Reserve Bank of Philadelphia

Robert M. Hunt

Consumer Finance Institute, Federal Reserve Bank of Philadelphia

Jake Carr

Center for Urban and Regional Analysis

Tony E. Smith

University of Pennsylvania - Department of Systems Engineering

Multiple version iconThere are 3 versions of this paper

Date Written: January 1, 2015

Abstract

We employ a unique data set to examine the spatial clustering of private R&D labs, and, using patent citations data, we provide evidence of localized knowledge spillovers within these clusters. Jaffe, Trajtenberg, and Henderson (1993, hereafter JTH) provide an aggregate measure of the importance of knowledge spillovers at either the state or metropolitan area level. However, much information is lost regarding differences in the localization of knowledge spillovers in specific geographic areas. In this article, we show that such differences can be quite substantial. Instead of using fixed spatial boundaries, we develop a new procedure — the multiscale core-cluster approach — for identifying the location and size of specific R&D clusters. This approach allows us to better capture the geographic extent of knowledge spillovers. We examine the evidence for knowledge spillovers within R&D clusters in two regions: the Northeast Corridor and California. In the former, we find that citations are from three to six times more likely to come from the same cluster as earlier patents than in comparable control samples. Our results are even stronger for labs located in California: Citations are roughly 10 to 12 times more likely to come from the same cluster. Our tests reveal evidence of the attenuation of localization effects as distance increases: The localization of knowledge spillovers is strongest at small spatial scales (5 miles or less) and diminishes rapidly with distance. At the smallest spatial scales, our localization statistics are generally much larger than JTH report for the metropolitan areas included in their tests.

Note: This working paper supersedes WP 12-22, WP 11-42, and WP 10-33.

Keywords: Spatial clustering; R&D

JEL Classification: O31, R12

Suggested Citation

Buzard, Kristy and Carlino, Gerald A. and Hunt, Robert M. and Carr, Jake and Smith, Tony E., Localized Knowledge Spillovers: Evidence from the Agglomeration of American R&D Labs and Patent Data (January 1, 2015). FRB of Philadelphia Working Paper No. 15-03, Available at SSRN: https://ssrn.com/abstract=2553457 or http://dx.doi.org/10.2139/ssrn.2553457

Kristy Buzard

Syracuse University - Department of Economics ( email )

Syracuse, NY 13244-1020
United States

HOME PAGE: http://faculty.maxwell.syr.edu/kbuzard

Gerald A. Carlino (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States
215-574-6434 (Phone)
215-574-4364 (Fax)

Robert M. Hunt

Consumer Finance Institute, Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States
215-574-3806 (Phone)
215-574-7101 (Fax)

Jake Carr

Center for Urban and Regional Analysis ( email )

0126 Derby Hall
154 North Oval Mall
Columbus, OH 43210
United States

Tony E. Smith

University of Pennsylvania - Department of Systems Engineering ( email )

School of Engineering & Applied Science
3718 Locust Walk
Philadelphia, PA 19104
United States
215-898-9647 (Phone)
215-898-5020 (Fax)

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