MODELING SPATIAL AUTOCORRELATION IN SPATIAL INTERACTION DATA: AN APPLICATION TO PATENT CITATION DATA IN THE EUROPEAN UNION*

ABSTRACT Spatial interaction models of the gravity type are widely used to model origin–destination flows. They draw attention to three types of variables to explain variation in spatial interactions across geographic space: variables that characterize an origin region of a flow, variables that characterize a destination region of a flow, and finally variables that measure the separation between origin and destination regions. This paper outlines and compares two approaches, the spatial econometric and the eigenfunction‐based spatial filtering approach, to deal with the issue of spatial autocorrelation among flow residuals. An example using patent citation data that capture knowledge flows across 112 European regions serves to illustrate the application and the comparison of the two approaches.