TY - JOUR AU - Agrawal,Ajay AU - Kapur,Devesh AU - McHale,John TI - Birds of a Feather - Better Together? Exploring the Optimal Spatial Distribution of Ethnic Inventors JF - National Bureau of Economic Research Working Paper Series VL - No. 12823 PY - 2007 Y2 - January 2007 UR - http://www.nber.org/papers/w12823 L1 - http://www.nber.org/papers/w12823.pdf N1 - Author contact info: Ajay K. Agrawal Rotman School of Management University of Toronto 105 St. George Street Toronto, ON M5S 3E6 CANADA Tel: 416/946-0203 Fax: 416/978-5433 E-Mail: ajay.agrawal@rotman.utoronto.ca Devesh Kapur 3600 Market Street, Suite 560 Centre for Advanced Study of India University of Pennsylvania E-Mail: dkapur@sas.upenn.edu John McHale Queen's School of Business Goodes Hall 143 Union Street Kingston, Ontario Canada K7L 3N6 E-Mail: jmchale@business.queensu.ca AB - We examine how the spatial and social proximity of inventors affects knowledge flows, focusing especially on how the two forms of proximity interact. We develop a knowledge flow production function (KFPF) as a flexible tool for modeling access to knowledge and show that the optimal spatial concentration of socially proximate inventors in a city or nation depends on whether spatial and social proximity are complements or substitutes in facilitating knowledge flows. We employ patent citation data, using same-MSA and co-ethnicity as proxies for spatial and social proximity, respectively, to estimate the key KFPF parameters. Although co-location and co-ethnicity both predict knowledge flows, the marginal benefit of co-location is significantly less for co-ethnic inventors. These results imply that dispersion of socially proximate individuals is optimal from the perspectives of the city and the economy. In contrast, for socially proximate individuals themselves, spatial concentration is preferred - and the only stable equilibrium. ER -