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Academic Freedom, Private-Sector Focus, and the Process of Innovation

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  • Philippe Aghion
  • Mathias Dewatripont
  • Jeremy C. Stein

Abstract

We develop a model that clarifies the respective advantages and disad- vantages of academic and private-sector research. Our model assumes full protection of intellectual property rights at all stages of the development process, and hence does not rely on lack of appropriability or spillovers to generate a rationale for academic research. Instead, we focus on control- rights considerations, and argue that the fundamental tradeoff between academia and the private sector is one of creative control versus focus. By serving as a precommitment mechanism that allows scientists to freely pursue their own interests, academia can be indispensable for early-stage research. At the same time, the private sector's ability to direct scientists towards higher-payo¤ activities makes it more attractive for later-stage re- search.

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Bibliographic Info

Paper provided by Harvard - Institute of Economic Research in its series Harvard Institute of Economic Research Working Papers with number 2089.

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Date of creation: 2005
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Handle: RePEc:fth:harver:2089

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  1. Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1996. "The Proper Scope of Government: Theory and an Application to Prisons," NBER Working Papers 5744, National Bureau of Economic Research, Inc.
  2. Scott Stern, 2004. "Do Scientists Pay to Be Scientists?," Management Science, INFORMS, INFORMS, vol. 50(6), pages 835-853, June.
  3. Philippe Aghion & Jean Tirole, 1994. "Normal and Real Authority in Organizations," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 94-13, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Saul Lach & Mark Schankerman, 2008. "Incentives and invention in universities," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 403-433.
  5. Michael S. McPherson & Morton Owen Schapiro, 1999. "Tenure Issues in Higher Education," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 13(1), pages 85-98, Winter.
  6. Hart, Oliver D. & Moore, John, 1990. "Property Rights and the Nature of the Firm," Scholarly Articles 3448675, Harvard University Department of Economics.
  7. Steven N. Kaplan & Berk A. Sensoy & Per Strömberg, 2005. "What Are Firms? Evolution from Birth to Public Companies," NBER Working Papers 11581, National Bureau of Economic Research, Inc.
  8. Daron Acemoglu & Michael Kremer & Atif Mian, 2003. "Incentives in Markets, Firms and Governments," NBER Working Papers 9802, National Bureau of Economic Research, Inc.
  9. Holmstrom, Bengt, 1999. "Managerial Incentive Problems: A Dynamic Perspective," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 66(1), pages 169-82, January.
  10. Carmichael, H Lorne, 1988. "Incentives in Academics: Why Is There Tenure?," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 96(3), pages 453-72, June.
  11. Ajay Agrawal & Rebecca Henderson, 2002. "Putting Patents in Context: Exploring Knowledge Transfer from MIT," Management Science, INFORMS, INFORMS, vol. 48(1), pages 44-60, January.
  12. Hellmann, Thomas F & Perotti, Enrico C, 2006. "The Circulation of Ideas: Firms Versus Markets," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5469, C.E.P.R. Discussion Papers.
  13. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
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