Chapter 2 Investing in Knowledge

2.
Investing ginknowledge g
2.1Publicandprivatemechanisms
Some slides adopted from Suzanne Scotchmer Contents May Be Used Pursuant to AttributionNoncommercialNo Derivative Works 1.0 Generic h // http://creativecommons.org/licenses/by i /li /b nd dnc/1.0/ /1 0/
Universityof Zurich
Departmentof BusinessAdministration Prof.Dr.UlrichKaiser
TheEconomicsofInnovation
Springsemester2013 1
2.Investing ginknowledge g
Who Funds R&D? Is it the private sector that matters? Which countries spend more on R&D? How much money does the government give the private sector for R&D? Universities? How much money does the private sector give to universities? How much money goes for defenserelated R&D? What is the funding for?
(cc)SuzanneScotchmer
Universityof Zurich
Big difference between public and private R&D: Private R&D applied Public R&D basic Private R&D maximizes profits Public R&D maximizes welfare
(cc)UlrichKaiser
Universityof Zurich
Oddity of publicly financed R&D: BayhDoyle act (1980) patents are assigned to public research institutions in the US Europe followed suit Technology transfer offices are all over the place (also at UZH) In what way has the incentive system changed? Why was the act installed in the first place?
(cc)UlrichKaiser
Universityof Zurich
Universityof Zurich
Universityof Zurich
N o n d e fe n s e G o v e r n m e n t S p e n d in g o n R & D
3 .5 3 2 .5 Pe ercentage 2 1 .5 1 0 .5 0
r 81 83 85 87 89 91 93 95 ea 19 19 19 19 19 19 19 19 19 Y 97
In d e c r e a s in g o r d e r o f t e r m in a l ( 1 9 9 8 ) v a lu e s : J a p a n , G e r m a n y , U .S . ( in b o ld ) , F r a n c e , U .K ., C a n a d a , It a ly
Universityof Zurich
Universityof Zurich
Universityof Zurich
R&D spending, Percentages of total 0.8 0.7 0.6 Perce entage 0.5 04 0.4 0.3 0.2 0.1 0 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998
Universityof Zurich
Darkblue=public,Lightblue=private
0 .7 0 .6 0 .5 0 .4 0 .3 0 .2 0 .1 0 1 9 5 3 1 9 6 2 1 9 7 1 1 9 8 0 Y e a r 1 9 8 9 1 9 9 8
Top:USFundingtoindustry.Bottom:USFundingtouniversities
Universityof Zurich
Federal Industrial Intramural Firms Total $83,609 $36,462 $36 462 $19,463 $9,966 $7,656 $3 431 $3,431 $1,892 $1,163 $882 $672 $620 $1,401
R&D Budget
Total Universities other FFRDC Colleges nonprofit 8.88% 2.06% 2 06% 1.32% 13.19% 63.05% 6 73% 6.73% 0.00% 0.00% 0.00% 0 68% 0.68% 0.00% 2.50% 21.43% 4.21% 4 21% 56.47% 7.90% 9.43% 81 26% 81.26% 26.48% 10.92% 7.74% 6 92% 6.92% 22.62% 14.78% 5.01% 0.42% 0 42% 15.40% 3.86% 0.78% 5 63% 5.63% 0.48% 2.06% 0.16% 2 04% 2.04% 9.38% 20.41%
State/Local Government 0.49% 0.03% 0 03% 0.68% 0.11% 0.04% 0 20% 0.20% 0.16% 1.03% 0.81% 20 52% 20.52% 1.64% 2.50%
Foreign 0.34% 0.18% 0 18% 0.31% 1.11% 0.01% 0 50% 0.50% 0.21% 0.00% 0.32% 0 11% 0.11% 0.30% 1.57%
23.67% 23.66% 23 66% 19.90% 25.16% 11.38% 1 78% 1.78% 72.09% 69.82% 88.06% 32 77% 32.77% 18.60% 51.25%
40.17% 69.43% 69 43% 5.92% 48.67% 15.32% 3 91% 3.91% 0.58% 16.08% 3.06% 36 96% 36.96% 47.62% 7.07%
Defense HHS NASA Energy NSF Agriculture Commerce Interior DOT EPA Others
S Source: NSF NSF, S Science i and dE Engineering i i I Indicators di t 2002 2002, T Table bl 4 4-25 25
Universityof Zurich
Examples for public funds Packetswitching technology of the Internet US DOD CERN European states Biotech basis UC Berkeley and San Franscico Digital computer U Pennsylvania Laser Columbia U
(cc)UlrichKaiser
Universityof Zurich
Research incentives Public P bli publish bli h in i journals j l (or ( perish); i h) reputation; t ti nowadays d also l incentives to attract funding Private patent (or perish) Outcome Average university licensing offices receives 69 invention disclosures Applies for for a patent Universities apply for four times more patents as private industry Pressure from university leadership to go for profits instead of dissemination Big bang: Harvard/Hoechst USD70 mio. deal in 1984; idea: leverage ideas and expertise in return for funding
(cc)UlrichKaiser
Universityof Zurich
Public/private /p Grantee may restrict communication between colleagues 7% of university funding is private Public funds may subsidize private funds as funding goes to same institution/even same lab Example: Sandoz wanted to pay USD 300 mio. for 100% of Scripps R Research h Institute I tit t (San (S Di ) Scripps Diego); S i i an NIH funded is f d d research h organization; government asked to scale back (what patents will Sandoz pick?) Startup activity by b universities see UZH 175 years yearbook b k for f examples; more prominent examples are Genentech and Chiron (UC) Licensing offices provide IPR in return for fees
(cc)UlrichKaiser
Universityof Zurich
Universityof Zurich
cost,funds, profit
vT+s
vT s+ m
s
m
v v
s=g governmentalsubsidy, y,m=firmsmatching grequirement q (invest.), ( ),v=socialvalue, , vT=profit,=firmsshareofv,T=patentlength (cc)SuzanneScotchmer
Universityof Zurich
value
Thegovernmentgrantprocess:fundingInventorsinsteadofInventions? Whymightyouexpectitnottowork?Freeriding,etc. Whydoesnoonecheat? ( c) SelfselectionandFunding;valueofideasinperiodt: t (1 + r ) Discountedvalueoffuturegrants: 1 c = c = ( c) ( ) ( ) t
t =1
(1 + r )
t =1
(1 + r )
Investifthevalueofcheating,c,islessthanvalueoffuturegrants(self selectionmechanismofthehighfertility(thebest)researchers)
c
t =1
(1 + r )
t
( c) c
+r
Universityof Zurich
Questions about grants: What if you are a highcost researcher? What if you are a lowfertility (low)? Will the th government t have h t over to pay? ?
Universityof Zurich
2.2HowIntellectualPropertyWorks
The (public goods) nature of knowledge & information goods Longitude L i d Example: E l What Wh is i the h lesson? l ? What do these have in common: Knowledge g that DNA is a double helix Software Digital music Public P bli Goods: G d Nonrivalness: High cost to create; zero cost to distribute or use. What is the efficiency conclusion? Nonexcludability: If the good is nonexcludable, IP will not work!!
Universityof Zurich
The(publicgoods)natureofknowledge&informationgoods Pi Private Goods: G d The Th competitive i i market k is i efficient ffi i price=marginalcost:Whyisthatefficient? Whatifatemplatemustbedeveloped?
Universityof Zurich
WhatdoesIPdo? IPcreates(as ( alegal l lmatter) )excludability. l d bili Doesthissolvethepublicgoodsproblem? Whataboutnonrivalness? IPprovidesatleastaweakefficiencytestastowhetherthevalueof investmentexceedscost IPdoesabadjobofdelegation Itdoesnotprivilegethemoreefficientfirms Itdoesnotregulateentryandduplication IPleadstodeadweightloss IPconcentratescostsamongtheusers
Universityof Zurich
IntellectualProperty:Comparedtowhat?PublicSponsorship? 1960s 1960 and d1970s 1970 Super S Sonic S i Transport T Publicsupportforprivateenterprise. Napoleon: p Foodp preservation Inventionforthepublicgood NIH,NSF:Researcherinitiatedprojects NASA: NASA Targeted T t dgovernment tobjectives bj ti
Universityof Zurich
Prizes Targeted T dversusblue bl sky k research h Lyons(bluesky) Napoleons p foodp preservation(targeted) ( g ) Simplemodel:Investinablueskyidea(v,c)? Whynotmakethepricedependoncost? Why Wh doesnt d tthe th prize i giver i get tripped i doff? ff? Needstomakethepricedependonvalue TheroleofIPasabackgroundforprizes:Photography Hyattandcelluoid
Universityof Zurich
SimplePrizesandScarceIdeas Asingle i l inventors i has h anidea. id He H mustd decide id whether h h toi investi ini it,and d wewanthimtomaketherightdecision. Anideaisapair(v,c)wherecisthecostofmakingtheideaaninnovation andvisperperiodprofit. Investmentisefficientif(1/r)v>c. Ifweweregoingtousepri prizes esinstead,whatvalueofprize pri eshouldweset? Howdoestheoptimalprizerelatetov?toc? Howdoesthisdependonwhatisobservable?Verifiable?
Universityof Zurich
Prizes:Cantheprizebelinkedtovalue? How H should h ldthe h value l of fthe h prize i be b chosen? h ? Howwastheprizechoseninthecaseoflongitude? Canning? g TheLyonnaise y silkweavers? Woulditbebettertolinktheprizetocost? Whatproblemsdopatentsandprizehaveincommon?
Universityof Zurich

Chapter 2 Investing in Knowledge

Transféré par

Informations du document

Description originale:

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Chapter 2 Investing in Knowledge

Transféré par

Droits d'auteur :

Formats disponibles

2.

Departmentof BusinessAdministration Prof.Dr.UlrichKaiser

Vous aimerez peut-être aussi