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Incentives and invention in universities

Lach, Saul and Schankerman, Mark (2008) Incentives and invention in universities. RAND Journal of Economics, 39 (2). pp. 403-433. ISSN 0741-6261

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Identification Number: 10.1111/j.0741-6261.2008.00020.x


We show that universities in the United States that provide stronger royalty incentives to faculty scientists generate greater license income, controlling for university characteristics. We use pre-sample data on university patenting to control for the potential endogeneity of royalty shares. Faculty responds to royalties both in the form of cash and research lab support, indicating both pecuniary and intrinsic research motivations. The impact of incentives is larger in private than in public universities, and we provide new survey evidence on the organization and objectives of university licensing offices to explain this difference. Royalty incentives work both by raising faculty effort and sorting scientists across universities. The primary impact of incentives is to increase the quality rather than the quantity of inventions.

Item Type: Article
Official URL:
Additional Information: © 2008 RAND
Divisions: Economics
Subjects: H Social Sciences > HB Economic Theory
JEL classification: O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development
Date Deposited: 18 Apr 2011 08:49
Last Modified: 16 May 2024 00:47

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