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Incentives and invention in universities

  • Saul Lach
  • Mark Schankerman

We show that economic incentives affect the number and commercial value of inventions generated in universities. Using panel data for 102 U.S. universities during the period 1991-1999, we find that universities which give higher royalty shares to academic scientists generate more inventions and higher license income, controlling for other factors including university size, quality, research funding and technology licensing inputs. The incentive effects are much larger in private universities than in public ones. For private institutions there is a Laffer curve effect: raising the inventor’s royalty share increases the license income retained by the university. The incentive effect appears to work both through the level of effort and sorting of academic scientists.

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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 4711.

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Length: 60 pages
Date of creation: Mar 2004
Date of revision:
Handle: RePEc:ehl:lserod:4711
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