The Geographic Reach of Market and Non-Market Channels of Technology Transfer: Comparing Citations and Licenses of University Patents

The growth of high-technology clusters in the United States suggests the presence of strong regional agglomeration effects that reflect proximity to universities or other research institutions. Using data on licensed patents from the University of California, Stanford University, and Columbia University, this paper compares the geographic 'reach' of knowledge flows from university inventions through two important channels: non-market 'spillovers' exemplified by patent citations and market contracts (licenses). We find that knowledge flows through market transactions to be more geographically localized than those operating through non-market 'spillovers.' Moreover, the differential effects of distance on licenses and citations are most pronounced for exclusively licensed university patents. We interpret these findings as reflecting the incomplete nature of licensing contracts and the need for licensees to maintain access to inventor know-how for many university inventions. Such access appears to be less important for inventions that are non-exclusively licensed (e.g. 'research tools').