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Public R&D Investments and Private-sector Patenting: Evidence from NIH Funding Rules

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  • Pierre Azoulay
  • Joshua S. Graff Zivin
  • Danielle Li
  • Bhaven N. Sampat

Abstract

We quantify the impact of scientific grant funding at the National Institutes of Health (NIH) on patenting by pharmaceutical and biotechnology firms. Our paper makes two contributions. First, we use newly constructed bibliometric data to develop a method for flexibly linking specific grant expenditures to private-sector innovations. Second, we take advantage of idiosyncratic rigidities in the rules governing NIH peer review to generate exogenous variation in funding across research areas. Our results show that NIH funding spurs the development of private-sector patents: a $10 million boost in NIH funding leads to a net increase of 2.3 patents. Though valuing patents is difficult, we report a range of estimates for the private value of these patents using different approaches.

Suggested Citation

  • Pierre Azoulay & Joshua S. Graff Zivin & Danielle Li & Bhaven N. Sampat, 2015. "Public R&D Investments and Private-sector Patenting: Evidence from NIH Funding Rules," NBER Working Papers 20889, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:20889
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    More about this item

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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