Working Paper: NBER ID: w19252
Authors: Suzanne Scotchmer
Abstract: The Bayh-Dole Act allows universities to exploit patents on their federally sponsored research. University laboratories therefore have two sources of funds: direct grants from sponsors and income from licensing. Tax credits for private R&D also contribute, because they increase the profitability of licensing. Because Bayh-Dole profits are a source of funds, the question arises how subsidies and Bayh-Dole profits fit together. I show that subsidies to the university can either "prime the pump" for spending out of Bayh-Dole funds, or can crowd it out. Because of crowding out, if the sponsor wants to increase university spending beyond the university's own target, it will end up funding the entire research bill, just as if there were no profit opportunities under the Bayh-Dole Act. A subsidy system that requires university matching can mitigate this problem.
Keywords: Bayh-Dole Act; research subsidies; university funding
JEL Codes: K0; L00; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| subsidies (H20) | Bayh-Dole profits (O39) |
| subsidies (H20) | university spending (I23) |
| Bayh-Dole Act (O38) | crowding out of research funding (I23) |
| matching subsidies (H20) | research spending (I23) |
| fixed levy (H29) | subsidies increase spending (H50) |
| adjustable levy (E64) | crowding out (E62) |