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The Effects of University Patenting and Licensing on Downstream R&D Investment and Social Welfare

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Abstract

A central argument behind the Bayh-Dole Act presumed that firms had no incentives to invest in downstream R&D aimed at developing university inventions committed to the public domain. The empirical evidence on university patenting and licensing is partly at odds with the premises of this argument. Non-exclusive licensing of university patents has been common and lucrative, and in the area of biomedical technologies university patents and licensing restrictions may be a hindrance to downstream R&D, rather than a stimulus. The paper presents a model of R&D competition based on a university invention where appropriability conditions are defined by the patentability of downstream innovations and imitation opportunities. A comparison of equilibria under “open access” to university inventions and under “university patenting” shows that only under restrictive conditions the latter regime results in increased R&D investment and social welfare. In general, university licensing royalties are therefore a poor gauge of social welfare gains from university patenting.

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  1. Department of Economics & Geography, Hofstra University, 200 Barnard Hall, Hempstead, NY, 11549, USA

    Roberto Mazzoleni

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  1. Roberto Mazzoleni
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Correspondence to Roberto Mazzoleni.

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Mazzoleni, R. The Effects of University Patenting and Licensing on Downstream R&D Investment and Social Welfare. J Technol Transfer 31, 431–441 (2006). https://doi.org/10.1007/s10961-006-0004-x

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  • DOI: https://doi.org/10.1007/s10961-006-0004-x

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