Technology Variation vs. R&D Uncertainty: What Matters Most for Energy Patent Success?

50 Pages Posted: 27 Jan 2012 Last revised: 28 Oct 2014

See all articles by David Popp

David Popp

Syracuse University - Department of Public Administration; National Bureau of Economic Research (NBER)

Nidhi Santen

Harvard University, Harvard Kennedy School (HKS), Belfer Center for Science and International Affairs (BCSIA)

Karen Fisher-Vanden

Pennsylvania State University

Mort Webster

Pennsylvania State University

Date Written: January 2012

Abstract

R&D is an uncertain activity with highly skewed outcomes. Nonetheless, most recent empirical studies and modeling estimates of the potential of technological change focus on the average returns to research and development (R&D) for a composite technology and contain little or no information about the distribution of returns to R&D--which could be important for capturing the range of costs associated with climate change mitigation policies--by individual technologies. Through an empirical study of patent citation data, this paper adds to the literature on returns to energy R&D by focusing on the behavior of the most successful innovations for six energy technologies, allowing us to determine whether uncertainty or differences in technologies matter most for success. We highlight two key results. First, we compare the results from an aggregate analysis of six energy technologies to technology-by-technology results. Our results show that existing work that assumes diminishing returns but assumes one generic technology is too simplistic and misses important differences between more successful and less successful technologies. Second, we use quantile regression techniques to learn more about patents that have a high positive error term in our regressions - that is, patents that receive many more citations than predicted based on observable characteristics. We find that differences across technologies, rather than differences across quantiles within technologies, are more important. The value of successful technologies persists longer than those of less successful technologies, providing evidence that success is the culmination of several advances building upon one another, rather than resulting from one single breakthrough. Diminishing returns to research efforts appear most problematic during rapid increases of research investment, such as experienced by solar energy in the 1970s.

Suggested Citation

Popp, David C. and Santen, Nidhi and Fisher-Vanden, Karen and Webster, Mort, Technology Variation vs. R&D Uncertainty: What Matters Most for Energy Patent Success? (January 2012). NBER Working Paper No. w17792, Available at SSRN: https://ssrn.com/abstract=1992828

David C. Popp (Contact Author)

Syracuse University - Department of Public Administration ( email )

Syracuse, NY
United States
315-443-2482 (Phone)
315-443-1075 (Fax)

HOME PAGE: http://faculty.maxwell.syr.edu/dcpopp/index.html

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Nidhi Santen

Harvard University, Harvard Kennedy School (HKS), Belfer Center for Science and International Affairs (BCSIA) ( email )

79 JFK Street
Cambridge, MA 02138
United States

Karen Fisher-Vanden

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Mort Webster

Pennsylvania State University ( email )

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