| Abstract: |
Using data on U.S. universities, we show that universities that give higher
royalty shares to facultyscientists generate greater license income,
controlling for other factors including university size,quality, research
funding, and local demand conditions. We use pre-sample data on
universitypatenting to control for the endogeneity of royalty shares. The
incentive effects are larger in privateuniversities than in public ones, and
we provide survey evidence on performance-based pay,government constraints and
objectives of Technology License Offices that helps explain this
finding.Royalty incentives work through two channels — raising faculty effort
and sorting scientists acrossuniversities. The effect of incentives is mainly
to increase the quality rather than the quantity ofinventions. |