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

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Author Info
Philippe Aghion
Mathias Dewatripont
Jeremy C. Stein

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Abstract

We develop a model that clarifies the respective advantages and disadvantages 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%u2019s ability to direct scientists towards higher-payoff activities makes it more attractive for later-stage research.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11542.

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Date of creation: Aug 2005
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Handle: RePEc:nbr:nberwo:11542

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Find related papers by JEL classification:
L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Boundaries of Public and Private Enterprise; Privatization; Contracting Out
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Hart, Oliver & Shleifer, Andrei & Vishny, Robert W, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1127-61, November.
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  2. 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. [Downloadable!] (restricted)
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  3. Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 1-29, February.
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  4. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-58, December. [Downloadable!] (restricted)
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  5. Lach, Saul & Schankerman, Mark, 2003. "Incentives and Invention in Universities," CEPR Discussion Papers 3916, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  6. 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. [Downloadable!]
  7. Michael S. McPherson & Morton Owen Schapiro, 1999. "Tenure Issues in Higher Education," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 85-98, Winter. [Downloadable!] (restricted)
  8. Carmichael, H Lorne, 1988. "Incentives in Academics: Why Is There Tenure?," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 453-72, June. [Downloadable!] (restricted)
  9. Holmstrom, Bengt, 1999. "Managerial Incentive Problems: A Dynamic Perspective," Review of Economic Studies, Blackwell Publishing, vol. 66(1), pages 169-82, January. [Downloadable!] (restricted)
  10. Bengt Holmstrom, 1999. "Managerial Incentive Problems: A Dynamic Perspective," NBER Working Papers 6875, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. Daron Acemoglu & Michael Kremer & Atif Mian, 2003. "Incentives in Markets, Firms and Governments," NBER Working Papers 9802, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Armando Castelar Pinneiro & Regis Bonelli, 2008. "Nuevas Actividades Exportadoras en Brasil: Ventaja Comparativa, Políticas o Auto-Descubrimiento?," RES Working Papers 3257, Inter-American Development Bank, Research Department. [Downloadable!]
  2. Simona Fabrizi & Steffen Lippert, 2007. "On Moral Hazard and Joint R&D," Keele Economics Research Papers KERP 2007/03, Centre for Economic Research, Keele University. [Downloadable!]
  3. 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. [Downloadable!] (restricted)
    Other versions:
  4. Belenzon, Sharon & Schankerman, Mark, 2007. "Harnessing Success: Determinants of University Technology Licensing Performance," CEPR Discussion Papers 6120, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  5. Broström, Anders & McKelvey, Maureen, 2009. "How do Organisational and Cognitive Distances Shape Firms’ Interactions with Universities and Public Research Institutes?," Working Paper Series in Economics and Institutions of Innovation 188, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies. [Downloadable!]
  6. Carillo, Maria Rosaria & Papagni, Erasmo, 2007. "Social rewards in science and economic growth," MPRA Paper 2776, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  7. Maria Rosaria Carillo & Erasmo Papagni, 2006. "Academic Research, Social Interactions and Economic Growth," Discussion Papers 9_2006, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy. [Downloadable!]
    Other versions:
  8. Sharon Belenzon & Mark Schankerman, 2007. "The Impact of Private Ownership, Incentives and Local Development Objectives on University Technology Transfer Performance," CEP Discussion Papers dp0779, Centre for Economic Performance, LSE. [Downloadable!]
  9. Luca, SPINESI, 2007. "IPR for Public and Private Innovations, and Growth," Discussion Papers (ECON - Département des Sciences Economiques) 2007015, Université catholique de Louvain, Département des Sciences Economiques. [Downloadable!]
  10. Armando Castelar Pinneiro & Regis Bonelli, 2008. "New Export Activities in Brazil: Comparative Advantage, Policy or Self-Discovery?," RES Working Papers 3256, Inter-American Development Bank, Research Department. [Downloadable!]
  11. Brezis, Elise S., 2008. "Is Privatization Necessary to achieve Quality of Universities?," MPRA Paper 12485, University Library of Munich, Germany. [Downloadable!]
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