Incentives and Invention in Universities

61 Pages Posted: 24 Jul 2003

See all articles by Saul Lach

Saul Lach

Hebrew University of Jerusalem - Department of Economics; CEPR

Mark A. Schankerman

London School of Economics and Political Science; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 4 versions of this paper

Date Written: May 2003

Abstract

We show that economic incentives affect the number and commercial value of inventions generated in universities. Using panel data for 102 US universities during the period 1991-99, 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.

Keywords: Incentives, royalties, licensing, technology transfer, academic research, intellectual property

JEL Classification: L30, O31, O34

Suggested Citation

Lach, Saul and Schankerman, Mark A., Incentives and Invention in Universities (May 2003). CEPR Discussion Paper No. 3916. Available at SSRN: https://ssrn.com/abstract=428060

Saul Lach

Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem, 91905
Israel
+972 2 588 3253 (Phone)
+972 2 581 6071 (Fax)

HOME PAGE: http://economics.huji.ac.il/facultye/saul/saul.html

CEPR

London
United Kingdom

Mark A. Schankerman (Contact Author)

London School of Economics and Political Science ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 7518 (Phone)
+44 20 7831 1840 (Fax)

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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