Do innovations diffuse faster within geographical clusters?

There is considerable evidence to demonstrate that the diffusion of new technologies is spatially variable. This paper argues that externalities promoting the adoption of new technology are stronger at the regional level and depend positively on the proximity of early users. An empirical model of diffusion is built, including variables related to the regional density of adopters and of technologically close firms. Results support the existence of significant regional learning effects on adoption. These effects seem to be stronger at the early stages of diffusion. (C) 2000 Elsevier Science B.V. All rights reserved.