TY  - JOUR
AU  - Keller,Wolfgang
AU  - Yeaple,Stephen R.
TI  - The Gravity of Knowledge
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15509
PY  - 2009
Y2  - November 2009
UR  - http://www.nber.org/papers/w15509
L1  - http://www.nber.org/papers/w15509.pdf
N1  - Author contact info:
Wolfgang Keller
Department of Economics
University of Colorado-Boulder
Boulder, CO 80309-0256
Tel: 303/735 5507
Fax: 303/492 8960
E-Mail: Wolfgang.Keller@colorado.edu

Stephen Yeaple
Department of Economics
The Pennsylvania State University
520 Kern Building
University Park, PA 16802-3306
Tel: 8148655452
E-Mail: sry3@psu.edu
AB  - How large are spatial barriers to transferring knowledge? We analyze the international operations of multinational firms to answer this fundamental question. In our model firms can transfer bits of knowledge to their foreign affiliates in either embodied (traded intermediates) or disembodied form (direct communication). Knowledge transfer costs interact with the knowledge intensity of production to determine the geographic structure of multinationals' input sourcing as well as its competitiveness in foreign markets. The model shows how data on observable trade costs and features of  multinationals' global operations reveal the size and nature of knowledge transfer costs. Our empirical analysis confirms the model's predictions using firm-level data, quantifies the aggregate implications of the model for the structure of multinationals' operations, and demonstrates that transfer costs shape the knowledge content of intra-firm trade flows.
ER  -