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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 disadvantages of academic and private-sector research. Rather than relying on lack of appropriability or spillovers to generate a rationale for academic research, we emphasize 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 toward higher-payoff activities makes it more attractive for later-stage research. Copyright (c) 2008, RAND.

Suggested Citation

  • Philippe Aghion & Mathias Dewatripont & Jeremy C. Stein, 2008. "Academic freedom, private-sector focus, and the process of innovation," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 617-635.
  • Handle: RePEc:bla:randje:v:39:y:2008:i:3:p:617-635
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    References listed on IDEAS

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    1. Kaplan, Steven & Sensoy, Berk A. & Strömberg, Per Johan, 2005. "What are Firms? Evolution from Birth to Public Companies," CEPR Discussion Papers 5224, C.E.P.R. Discussion Papers.
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    5. Michael S. McPherson & Morton Owen Schapiro, 1999. "Tenure Issues in Higher Education," Journal of Economic Perspectives, American Economic Association, pages 85-98.
    6. 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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    15. repec:hrv:faseco:30727607 is not listed on IDEAS
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    More about this item

    JEL classification:

    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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