Working Paper: NBER ID: w10758
Authors: Richard Jensen; Marie Thursby
Abstract: We construct a dynamic model of university research that allows us to examine recent concerns that financial incentives associated with university patent licensing are detrimental to the traditional mission of US research universities. We assume a principal-agent framework in which the university administration is the principal and a faculty researcher is the agent. Whether or not the researcher remains in the university, and if so her choice of the amount of time to spend on basic and applied research, is complicated by the fact that she earns license income and prestige both inside and outside the university. Thus in contrast to usual principal agent models the participation constraint is endogenous. This, plus the fact that current research affects future knowledge stocks, allows us to show that it is far from obvious that licensing will damage basic research and education.
Keywords: patent licensing; university research; principal-agent model
JEL Codes: I2; L3; O32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Financial incentives from patent licensing (D45) | Time allocation to applied research (I23) |
| Time allocation to applied research (I23) | Future patentable knowledge production (O36) |
| Time allocation to applied research (I23) | Scientific knowledge production (O36) |
| Changes in salary or teaching load (M52) | Researcher’s allocation of time between research types (J29) |
| Higher license income (D45) | Marginal rate of substitution between applied and basic research (D29) |
| Marginal rate of substitution between applied and basic research (D29) | Time allocation to applied research (I23) |
| Policy changes related to patenting (O38) | Educational quality (I21) |
| Increased patentable knowledge (O34) | Educational quality (I21) |
| Reduced time devoted to teaching (A21) | Educational quality (I21) |