Of mice and academics: Examining the effect of openness on innovation

Citation: Fiona Murray, Philippe Aghion, Mathias Dewatripont, Julian Kolev, Scott Stern (2009) Of mice and academics: Examining the effect of openness on innovation.
Internet Archive Scholar (search for fulltext): Of mice and academics: Examining the effect of openness on innovation
Download: http://papers.ssrn.com/sol3/papers.cfm?abstract id=1369055
Tagged: Economics (RSS) science (RSS), biology (RSS), patents (RSS)

Summary

The paper attempts to offer a measure of the effect of patents on innovation in science. Borrowing a more Schumpeterian definition of innovation and as distinguished from Murray and Stern's (2007) other work on the flow of scientific ideas, this paper looks at the diversity of different ideas and combinations that stem from new scientific ideas and try to measure the effect of patents on the diversity of these new research lines. The authors argue in favor of looking not only at the effect of patents on a single line of research in terms of depth, but also at the effect on the breadth of research.

Empirically, the authors attempt to take advantage of a natural experiment. They look at the fact the Oncomouse and the Cre-Lox mouse were each patented. While these patents were strictly enforced for a number of years, the National Institute of Health worked with DuPont (the patent owner) and released a memorandum of understanding (MoU) which essentially stated that the owners of the patent agreed to a royalty free license. The authors argue that this was an exogenous "openness" shock.

The authors use an empirical approach to creates a set of onco-mouse and cre-lox and papers and also includes a set of "control" mouse papers. They use a differences-in-differences estimator to measure the effect of the shock.

The results show a significant increase in the amount of research following the NIH MoU with the following details:

• Most of these citations come from articles published by researchers who had not cited that mouse article previously.
• The increased openness was also associated with the creation of new lines of research in terms of the diversity of journals and previously unused keywords.
• Because Cre-Lox mice had almost no open distribution in violation of the patent agreements before the agreement, the amount of citations for Cre-Lox mice had a much bigger boost in basic research journals while the Oncomouse patents had a much bigger boost in applied research journals.

Theoretical and Practical Relevance

This article can be seen as almost a companion piece to Murray's The Oncomouse that roared: Resistance and accommodation to patenting in academic science. Both essentially consider the same event around the Oncomouse and the subsequent "Memorandum of Understanding" published. This paper provides the economic analysis that establishes the effect of the Oncomouse patents and the subsequent NIH deal. The earlier paper traces the sociological nature of the compromise between two competing systems.