Science Is Golden: Academic R&D and University Patents

Many studies have shown indirect effects of academic research by linking academic research to firm patents. However, since the Bayh-Dole Act, universities are allowed to patent inventions that were funded by federal money and to retain the royalties that these patents generate. As a consequence, universities now are interested in protecting their profitable discoveries, just like any commercial firm doing R&D. In this paper, we apply the econometric techniques traditionally used to estimate the patent production function of firms to data on the patents of American universities. We find that more money spent on academic research leads to more university patents, with elasticities that are similar to those found for commercial firms. In addition, we provide estimates of the effect of establishing a Technology Transfer Office on a university's patent output.