Concentration and Agglomeration of IT Innovation and Entrepreneurship: Evidence from Patenting
Information technology (IT) matters to prosperity. The top patenters are increasingly IT companies. We use data on US patents to document four trends in IT patenting. First, firm-level concentration in IT patenting is increasing over time. Second, geographic concentration in IT patenting is increasing over time. Third, most technology classes experienced a decline in new patenters from 1980 to 2000. This was not true of new IT patents. Since 2000, the trend in new IT patenters looks like other classes and is declining over time. Fourth, there is increased geographic concentration of new IT patenters. We do not identify the reasons behind these trends nor whether they are related to overall changes in industry concentration, agglomeration, or prosperity.
We thank Mike Andrews, Erik Brynjolfsson, Ronnie Chatterji, Scott Stern, and participants at the conference for helpful comments and suggestions. We thank David Balter and Xiaomeng Chen for outstanding research assistance. All opinions and errors are ours alone. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
I have no direct financial interest. I receive income from a book and from public talks related to my research on the economics of artificial intelligence. I am also the Chief Data Scientist of the Creative Destruction Lab, a non-profit program for technology-based startups. I am a small seed investor in several startups and have investments in large technology companies as part of a broad portfolio. A longer disclosure statement is here and below: https://www.avigoldfarb.com/disclosure
I have received grants supporting my research from multiple sources including the Sloan Foundation (ongoing), the Social Sciences and Humanities Research Council of Canada (ongoing), the National Science Foundation (ongoing), Google (most recently 2009), WPP (most recently 2009), the Net Institute (most recently 2007), Plurimus Corporation (most recently 2001), and the Social Science Research Council (most recently 2000). I run a consulting company, Goldfarb Analytics Corporation, that advises organizations on digital and AI strategy. Clients have included Keystone Strategy (on matters of competition in the ad tech space), Hogan Lovells, Bruce Power, Bond Brand Loyalty, BMO, and Property Valuation Services Corporation of Nova Scotia. I have given lectures—sometimes paid—at several companies including BMC, Neoway, Amazon, Microsoft, Sisense, Bloomberg, Indigo, Google, INTACT, Boehringer Ingelheim, McKesson, Neighbourhood Pharmacy Association of Canada, Hospital for Sick Children, Pinterest, Netflix, Zetta Venture Partners, ScotiaBank, Ebay, and Facebook. I am Chief Data Scientist at the Creative Destruction Lab, a non-profit organization that helps science-based startups to scale. I also hold shares in many technology companies as part of a well-balanced investment portfolio.