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Public R&D Investments and Private-sector Patenting: Evidence from NIH Funding Rules

Author

Listed:
  • Pierre Azoulay
  • Joshua S. Graff Zivin
  • Danielle Li
  • Bhaven N. Sampat

Abstract

We quantify the impact of scientific grant funding at the National Institutes of Health (NIH) on patenting by pharmaceutical and biotechnology firms. Our paper makes two contributions. First, we use newly constructed bibliometric data to develop a method for flexibly linking specific grant expenditures to private-sector innovations. Second, we take advantage of idiosyncratic rigidities in the rules governing NIH peer review to generate exogenous variation in funding across research areas. Our results show that NIH funding spurs the development of private-sector patents: a $10 million boost in NIH funding leads to a net increase of 2.3 patents. Though valuing patents is difficult, we report a range of estimates for the private value of these patents using different approaches.

Suggested Citation

  • Pierre Azoulay & Joshua S. Graff Zivin & Danielle Li & Bhaven N. Sampat, 2015. "Public R&D Investments and Private-sector Patenting: Evidence from NIH Funding Rules," NBER Working Papers 20889, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:20889
    Note: HC PE PR
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    File URL: http://www.nber.org/papers/w20889.pdf
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    References listed on IDEAS

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    1. Juan Alcácer & Michelle Gittelman, 2006. "Patent Citations as a Measure of Knowledge Flows: The Influence of Examiner Citations," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 774-779, November.
    2. repec:aph:ajpbhl:10.2105/ajph.2007.128769_8 is not listed on IDEAS
    3. Bhaven N. Sampat, 2010. "When Do Applicants Search for Prior Art?," Journal of Law and Economics, University of Chicago Press, vol. 53(2), pages 399-416, May.
    4. Adam B. Jaffe & Manuel Trajtenberg, 2005. "Patents, Citations, and Innovations: A Window on the Knowledge Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 026260065x, October.
    5. Hemphill, C. Scott & Sampat, Bhaven N., 2012. "Evergreening, patent challenges, and effective market life in pharmaceuticals," Journal of Health Economics, Elsevier, vol. 31(2), pages 327-339.
    6. Azoulay, Pierre & Ding, Waverly & Stuart, Toby, 2007. "The determinants of faculty patenting behavior: Demographics or opportunities?," Journal of Economic Behavior & Organization, Elsevier, vol. 63(4), pages 599-623, August.
    7. Narin, Francis & Olivastro, Dominic, 1992. "Status report: Linkage between technology and science," Research Policy, Elsevier, vol. 21(3), pages 237-249, June.
    8. Pierre Azoulay & Joshua S. Graff Zivin & Bhaven N. Sampat, 2011. "The Diffusion of Scientific Knowledge across Time and Space: Evidence from Professional Transitions for the Superstars of Medicine," NBER Chapters,in: The Rate and Direction of Inventive Activity Revisited, pages 107-155 National Bureau of Economic Research, Inc.
    9. Pierre Azoulay & Waverly Ding & Toby Stuart, 2007. "The Determinants of Faculty Patenting Behavior: Demographics or Opportunities?," NBER Chapters,in: Academic Science and Entrepreneurship: Dual Engines of Growth National Bureau of Economic Research, Inc.
    10. repec:spr:scient:v:69:y:2006:i:1:d:10.1007_s11192-006-0135-8 is not listed on IDEAS
    11. Ajay Agrawal & Rebecca Henderson, 2002. "Putting Patents in Context: Exploring Knowledge Transfer from MIT," Management Science, INFORMS, vol. 48(1), pages 44-60, January.
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    Citations

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    Cited by:

    1. Dechezlepretre, Antoine & Einiö, Elias & Martin, Ralf & Nguyen, Kieu-Trang & Reenen, John Van, 2016. "Do tax incentives for research increase firm innovation? An RD design for R&D," LSE Research Online Documents on Economics 66428, London School of Economics and Political Science, LSE Library.
    2. Mark Pauly & Kyle Myers, 2016. "A Ricardian-Demand Explanation for Changing Pharmaceutical R&D Productivity," NBER Working Papers 22720, National Bureau of Economic Research, Inc.
    3. RAITERI Emilio, 2015. "A time to nourish? Evaluating the impact of innovative public procurement on technological generality through patent data," Cahiers du GREThA 2015-05, Groupe de Recherche en Economie Théorique et Appliquée.
    4. Bruhn, Miriam & McKenzie, David J., 2017. "Can grants to consortia spur innovation and science-industry collaboration? Regression-discontinuity evidence from Poland," CEPR Discussion Papers 11765, C.E.P.R. Discussion Papers.
    5. Dan ANDREWS & Chiara CRISCUOLO & Dirk PILAT, 2015. "The Future of Productivity Improving the Diffusion of Technology and Knowledge," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(100), pages 85-105, 4th quart.

    More about this item

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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