Patents in the University: Priming the Pump and Crowding Out

Suzanne Scotchmer

No 19252, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: K0 L00 O34 (search for similar items in EconPapers)
Date: 2013-07
New Economics Papers: this item is included in nep-acc, nep-ino, nep-ipr, nep-pr~, nep-law and nep-pbe
Note: LE PR
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Published as Suzanne Scotchmer, 2013. "Patents in the University: Priming the Pump and Crowding Out," Journal of Industrial Economics, Wiley Blackwell, vol. 61(3), pages 817-844, 09.

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Journal Article: Patents in the University: Priming the Pump and Crowding Out (2013)
Working Paper: Patents in the University: Priming the Pump and Crowding Out (2013)
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