Proofs and Prototypes for Sale: the Tale of University Licensing

40 Pages Posted: 6 Nov 1998 Last revised: 29 Oct 2015

See all articles by Richard A. Jensen

Richard A. Jensen

University of Notre Dame - Department of Economics

Marie C. Thursby

Georgia Institute of Technology - Strategic Management Area; National Bureau of Economic Research (NBER)

Date Written: August 1998

Abstract

Proponents of the Bayh-Dole Act argue that unless universities have the right to license patentable inventions, many results from federally funded research would never be transferred to industry. Our survey of U.S. research universities supports this view. Results point to the embryonic state of most technologies licensed and the need for inventor cooperation in the commercialization process. Thus, for most university inventions, there is a moral hazard problem with regard to inventor effort. Our theoretical analysis shows that for such inventions, development would not occur unless the inventor's income is tied to the licensee's output by payments such as royalties or equity. Sponsored research can also be critical to commercialization, but it alone does not solve the inventor's moral hazard problem.

Suggested Citation

Jensen, Richard A. and Thursby, Marie C., Proofs and Prototypes for Sale: the Tale of University Licensing (August 1998). NBER Working Paper No. w6698. Available at SSRN: https://ssrn.com/abstract=122291

Richard A. Jensen

University of Notre Dame - Department of Economics ( email )

Notre Dame, IN 46556
United States

Marie C. Thursby (Contact Author)

Georgia Institute of Technology - Strategic Management Area ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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