Of Mice and Academics: Examining the Effect of Openness on Innovation

FEBRUARY 23, 2009

Just came across an interesting working paper put out last Autumn that is relevant to the openness and innovation debate. Entitled: Of Mice and Academics: Examining the Effect of Openness on Innovation and authored by Fiona Murray, Philippe Aghion, Mathias Dewatripont, Julian Kolev and Scott Stern, it is an attempt to bring some empirical evidence to bear in an area that so far has seen little.

It uses a natural experiment in the late 1990s when there was a significant reduction in patent restrictions (increase in openness) related to use of genetically engineered mice. Similar to an earlier paper of Stern and Murray’s the paper estimates the impact on science by exploiting the linkage between certain papers and particular genetically engineered mice (both those affected by increase in openness and those that were not). The overall conclusion is that increased openness does have a significant positive impact. (Which does something to bear out the suggestions of existing theoretical work such as Bessen and Maskin’s on Sequential Innovation and my paper on Cumulative Innovation and Experimentation – which explicitly discusses impacts of IP on scientific experimentation).

For full summary see the abstract inlined below (emphasis added):

Scientific freedom and openness are hallmarks of academia: relative to their counterparts in industry, academics maintain discretion over their research agenda and allow others to build on their discoveries. This paper examines the relationship between openness and freedom, building on recent models emphasizing that, from an economic perspective, freedom is the granting of control rights to researchers. Within this framework, openness of upstream research does not simply encourage higher levels of downstream exploitation. It also raises the incentives for additional upstream research by encouraging the establishment of entirely new research directions. In other words, within academia, restrictions on scientific openness (such as those created by formal intellectual property (IP)) may limit the diversity and experimentation of basic research itself. We test this hypothesis by examining a “natural experiment” in openness within the academic community: NIH agreements during the late 1990s that circumscribed IP restrictions for academics regarding certain genetically engineered mice. Using a sample of engineered mice that are linked to specific scientific papers (some affected by the NIH agreements and some not), we implement a differences-in-differences estimator to evalu- ate how the level and type of follow-on research using these mice changes after the NIH-induced increase in openness. We find a significant increase in the level of follow-on research. Moreover, this increase is driven by a substantial increase in the rate of exploration of more diverse research paths. Overall, our findings highlight a neglected cost of IP: reductions in the diversity of experimentation that follows from a single idea.