Title: "The Geography of Production and Sourcing in the Weightless Economy: Evidence from Open-source Software" (with Julian Hinz, Miklós Koren, and Aaron Lohmann).
Abstract: There is a great deal of evidence on how the shipment of goods, services, or the movement of people declines with distance. We study the role of spatial frictions when the good in question is weightless using data from the open-source software industry. We consider collaborative production of software as well as sourcing of pieces of software as intermediate good. Focusing on the largest language, JavaScript, we analyze contributions by 217 thousand developers in 300 thousand projects with 78 thousand unique projects imported as intermediate good (called a dependency). We aggregate them globally to the city level. We find that collaboration between different developers on the same piece of software is strongly localized, and decays with distance, country borders, visa requirements, and language differences. This result is robust to excluding interactions within highly localized organizations. By contrast, we find that importing other software packages as dependencies is only weakly correlated with spatial frictions. We discuss possible reasons behind these findings including face-to-face communications, institutions, and an interplay between these two activities.