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 technology. I am also the Chief Data Scientist of the Creative Destruction Lab a non-profit that engages with startups. I am a small seed investor in several AI startups and have investments in large technology companies as part of a broad portfolio. My full disclosure statement is available at https://www.avigoldfarb.com/disclosure.
Forthcoming: Concentration and Agglomeration of IT Innovation and Entrepreneurship: Evidence from Patenting, Chris Forman, Avi Goldfarb. in The Role of Innovation and Entrepreneurship in Economic Growth, Chatterji, Lerner, Stern, and Andrews. 2021