Localized knowledge spillovers: Evidence from the spatial clustering of R&D labs and patent citations

• Published in: Regional science and urban economics Vol. 81; p. 103490
• Main Authors: Buzard, Kristy, Carlino, Gerald A., Hunt, Robert M., Carr, Jake K., Smith, Tony E.
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01-03-2020; Elsevier Sequoia S.A
• Subjects: Citations; Clustering; Geographic concentration; Geography; Localization; Localized knowledge spillovers; Metropolitan areas; Patent citations; R&D; R&D labs; Research & development; Spatial clustering; Specification; Urban areas; Localized knowledge spillovers; Spatial clustering; R12; Patent citations; R&D labs; O31; Geographic concentration
• ISSN: 0166-0462; 1879-2308
• DOI: 10.1016/j.regsciurbeco.2019.103490

Buzard et al. (2017) show that American R&D labs are highly spatially concentrated even within a given metropolitan area. We argue that the geography of their clusters is better suited for studying knowledge spillovers than are states, metropolitan areas, or other political or administrative boundaries that have predominantly been used in previous studies. In this paper, we assign patents and citations to these newly defined clusters of R&D labs. Our tests show that the localization of knowledge spillovers, as measured via patent citations, is strongest at small spatial scales and diminishes with distance. On average, patents within a cluster are about two to four times more likely to cite an inventor in the same cluster than one in a control group. Of import, we find that the degree of localization of knowledge spillovers will be understated in samples based on metropolitan area definitions compared to samples based on the R&D clusters. At the same time, the strength of knowledge spillovers varies widely between clusters. The results are robust to the specification of patent technological categories, the method of citation matching, and alternate cluster definitions.
•R&D labs are highly spatially concentrated within the U.S.•The clustering of labs is better suited for studying knowledge spillovers than are metropolitan areas.•We show that knowledge spillovers, measured via patent citations, is strongest at small spatial scales and diminishes with distance.•On average, patents within a cluster are two to four times more likely to cite an inventor in the same cluster than one in a control group.•We find that knowledge spillovers will be understated in samples based on metropolitan areas.