Relatedness and Technological Change in Cities: The rise and fall of technological knowledge in U.S. metropolitan areas from 1981 to 2010

This paper investigates by means of USPTO patent data whether technological relatedness was a crucial driving force behind technological change in 366 U.S. cities from 1981 to 2010. Based on a three-way fixed effects model, we find that the entry probability of a new technology in a city increases by 30 percent if the level of relatedness with existing technologies in the city increases by 10 percent, while the exit probability of an existing technology decreases by 8 percent.