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Research and development (R&D) labs specialize in generating technical knowledge that will result in new patents. One key factor that influences their effectiveness is geography. Researchers at the Federal Reserve Bank of Philadelphia find that the greater the concentration of R&D labs in a metropolitan area, the greater the amount of collaborative patenting activity in that area.
They estimate that R&D labs clustered together are up to six times more likely to develop a patent through collaboration than R&D labs located by themselves. This is important because R&D labs tend to have very specialized technical knowledge, and through collaborating with labs that have other forms of specialized technical knowledge, they are able to develop more advanced patents.