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Research Output

Alice Kuegler - Do Inventions Respond to Changes in Economic Incentives? (JHLT).

The Responsiveness of Inventing: Evidence from a Patent Fee Reform, Alice Kuegler (2016)

Abstract: Do financial incentives induce inventors to innovate more? I exploit a large reduction in the patent fee in the United Kingdom in 1884 to distinguish between its effect on increased efforts to invent, and a decrease in patent quality due to a lower quality threshold. To analyse the impact on innovation I create a detailed new dataset of 54,000 British inventors with renewal information for each patent, which serves as the main quality measure. A framework is developed that explains the increasing quality and the decreasing number of patents just before the fee falls. I use significant excess bunching after the fee reduction to identify the short-run response. In the longer run high-quality patenting increases by over 100 percent, and the share of new patents due to greater effort accounts for three quarters of the pre-reform share of high-quality patents. To test for the presence of credit constraints I generate two asset proxies from inventor names and addresses, and find a larger innovation response for inventors with lower assets. These results indicate efficiency gains from decreasing the cost of inventing and in addition, from relaxing credit constraints.

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