Innovation without Patents: Evidence from World's Fairs
This paper introduces a unique historical data set of more than 8,000 British and American innovations at world's fairs between 1851 and 1915 to explore the relationship between patents and innovations. The data indicate that the majority of innovations--89 percent of British exhibits in 1851--were not patented. Comparisons across British and U.S. data also show that patenting decisions were unresponsive to differences in patent laws. Cross-sectional evidence suggests that high-quality and urban exhibits were more likely to be patented. The most significant differences, however, occurred across industries: inventors were most likely to use patents in industries in which innovations are easy to reverse engineer and secrecy is ineffective relative to patents. In the late nineteenth century, scientific breakthroughs, including the publication of the periodic table, reduced the effectiveness of secrecy in the chemical industry. Difference-in-differences regressions suggest that this change resulted in a significant shift toward patenting.
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