Incentives and Invention in Universities
AbstractWe show that economic incentives affect the commercial value of inventions generated in universities. Using data for 102 U.S. universities during the period 1991-1999, we find that universities which give higher royalty shares to academic scientists generate higher license income, controlling for other factors including university size, quality, research funding and technology licensing inputs. We provide evidence that this is due to the fact that public universities are less effective at commercialising inventions, which weakens the incentive effect of higher royalty shares. Other findings include: 1) there is a Laffer effect in private universities: raising the inventor's royalty share increases the license income retained by the university; 2) the incentive effect works primarily by increasing the quality of inventions, and 3) the incentive effect appears to operate both by raising faculty effort and by sorting academic scientists across universities.
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Bibliographic InfoPaper provided by Suntory and Toyota International Centres for Economics and Related Disciplines, LSE in its series STICERD - Economics of Industry Papers with number 33.
Date of creation: Mar 2004
Date of revision:
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Web page: http://sticerd.lse.ac.uk/_new/publications/default.asp
Academic research; incentives; licensing; royalties; technology transfer; intellectual property.;
Other versions of this item:
- Saul Lach & Mark Schankerman, 2004. "Incentives and invention in universities," LSE Research Online Documents on Economics 4711, London School of Economics and Political Science, LSE Library.
- Saul Lach & Mark Schankerman, 2007. "Incentives and invention in universities," LSE Research Online Documents on Economics 3725, London School of Economics and Political Science, LSE Library.
- Saul Lach & Mark Schankerman, 2008. "Incentives and invention in universities," LSE Research Online Documents on Economics 25475, London School of Economics and Political Science, LSE Library.
- Lach, Saul & Schankerman, Mark, 2003. "Incentives and Invention in Universities," CEPR Discussion Papers 3916, C.E.P.R. Discussion Papers.
- Saul Lach & Mark Schankerman, 2003. "Incentives and Invention in Universities," NBER Working Papers 9727, National Bureau of Economic Research, Inc.
- Saul Lach & Mark Schankerman, 2006. "Incentives and Invention in Universities," CEP Discussion Papers dp0729, Centre for Economic Performance, LSE.
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
- L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
- L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-01-02 (All new papers)
- NEP-INO-2005-01-02 (Innovation)
- NEP-LAB-2005-01-02 (Labour Economics)
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