Working Paper: NBER ID: w13294
Authors: Petra Moser
Abstract: This paper argues that the ability to keep innovations secret may be a key determinant of patenting. To test this hypothesis, the paper examines a newly-collected data set of more than 7,000 American and British innovations at four world's fairs between 1851 and 1915. Exhibition data show that the industry where an innovation is made is the single most important determinant of patenting. Urbanization, high innovative quality, and low costs of patenting also encourage patenting, but these influences are small compared with industry effects. If the effectiveness of secrecy is an important factor in inventors' patenting decisions, scientific breakthroughs, which facilitate reverse-engineering, should increase inventors' propensity to patent. The discovery of the periodic table in 1869 offers an opportunity to test this idea. Exhibition data show that patenting rates for chemical innovations increased substantially after the introduction of the periodic table, both over time and relative to other industries.
Keywords: patenting; innovation; secrecy; scientific breakthroughs; exhibition data
JEL Codes: D02; D21; D23; D62; K0; L1; L5; N0; N2; N21; N23; O3; O31; O34; O38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| effectiveness of secrecy (D83) | patenting decision (O34) |
| ability to reverse-engineer innovations (O36) | patenting decision (O34) |
| introduction of the periodic table (Y20) | patenting behavior (O34) |
| higher-quality innovations (L15) | patenting decision (O34) |
| industry characteristics (L81) | patenting behavior (O34) |
| urbanization (R11) | patenting behavior (O34) |