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3SLS method Acs and Audretsch activity to cluster Audretsch and Feldman California CEPR cluster geographically coefficients for value concentration of innovative concentration of production controlling data base degree of geographic distribution of innovative economic activity economic knowledge plays employment exhibit a greater extent Fabricated Metal firms four-digit SIC industries geography of innovation gini coefficients greater geographic concentration Henderson 1993 highly innovative industries importance of knowledge important role industries where knowledge industry R&D innovative activity clusters innovative activity tends Jaffe knowledge externalities exist Krugman links the geographic location of production Massachusetts number of innovations production and innovation production is geographically propensity for innovative propensity to cluster R&D intensity Regression Results Estimating semiconductor Silicon Valley skilled labor Small Business Administration spatial concentration spatial distribution standard industrial classification statistically significant Table tend to exhibit tends to cluster Trajtenberg and Henderson transportation costs unit of observation university research value added Value-Added