Restructuring Research: Communication Costs and the Democratization of University Innovation
We report evidence indicating that Bitnet adoption facilitated increased research collaboration between US universities. However, not all institutions benefited equally. Using panel data from seven top engineering journals, Bitnet connection records, and a variety of institution ranking data, we find that medium-ranked universities were the primary beneficiaries; they benefited largely by increasing their collaboration with top-ranked schools. Furthermore, we find that the magnitude of this effect was greatest for co-located pairs. These results suggest that the most salient effect of lowering communication costs may have been to facilitate gains from trade through the specialization of research tasks. Thus, the advent of Bitnet -- and likely subsequent versions, including the Internet -- seems to have increased the role of second-tier universities in the national innovation system as producers of new, high-quality knowledge.
We thank Pierre Azoulay, Erik Brynjolfsson, Iain Cockburn, Wes Cohen, Amy Finkelstein, Jeff Furman, Brent Goldfarb, Shane Greenstein, Bronwyn Hall, Dan Levinthal, Megan MacGarvie, Bhaven Sampat, Tim Simcoe, Paula Stephan, Scott Stern, Jerry Thursby, John Walsh, and especially Ig Horstmann, as well as seminar participants at the National Bureau of Economic Research, Massachusetts Institute of Technology, University of British Columbia, Georgia Tech, Ecole Polytechnique Federale de Lausanne, the Canadian Economics Association meetings, the IIOC, and the University of Toronto for useful comments. We also thank Raghav Misra, Swapnil Kotecha, Cara Saunders, and Alex Oettl, all of whom provided excellent research assistance. Errors and omissions are our own. This research was funded by the Social Sciences and Humanities Research Council of Canada (Grant Nos. 410-2004-1770 and 538-02-1013). Their support is gratefully acknowledged. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
Ajay Agrawal & Avi Goldfarb, 2008. "Restructuring Research: Communication Costs and the Democratization of University Innovation," American Economic Review, American Economic Association, vol. 98(4), pages 1578-90, September. citation courtesy of