Knowledge Spillovers of Products and Processes

This paper provides evidence that product innovations generate more knowledge spillovers than process innovations. I measure the existence of knowledge spillovers using patent-to-patent citations, the text of patents, and by measuring the stock of product and process R&D available to a firm. I find that product patents generate more citations and that the novel text in product patents is more likely to be reused relative to process patents. The result is robust a rich set of controls and heterogeneity analysis reveals that the gap in product and process knowledge spillovers widens for innovations that are novel or occurring in rapidly evolving areas of technology. I also find that when the stock of product (process) R&D available to a firm increases, patenting at the firm increases (decreases).