Working Paper: NBER ID: w11542
Authors: Philippe Aghion; Mathias Dewatripont; Jeremy C. Stein
Abstract: We develop a model that clarifies the respective advantages and disadvantages of academic and private-sector research. Our model assumes full protection of intellectual property rights at all stages of the development process, and hence does not rely on lack of appropriability or spillovers to generate a rationale for academic research. Instead, we focus on control-rights considerations, and argue that the fundamental tradeoff between academia and the private sector is one of creative control versus focus. By serving as a precommitment mechanism that allows scientists to freely pursue their own interests, academia can be indispensable for early-stage research. At the same time, the private sector's ability to direct scientists towards higher-payoff activities makes it more attractive for later-stage research.
Keywords: academic research; private sector; innovation; intellectual property rights
JEL Codes: L330; O310
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Structure of academia (I23) | Quality and quantity of early-stage research outputs (D29) |
| Private sector focus on high-payoff activities (L52) | Reduction in diversity of research topics pursued in early stages (O38) |
| Premature privatization (L33) | Stifling of innovation (O36) |
| Timing of transition from academia to private sector (J62) | Loss of valuable research opportunities (J17) |