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University Innovation and the Professor's Privilege (WP-17-03)

Hans Hvide, Benjamin Jones

National policies take varied approaches to encouraging university-based innovation. This paper studies a natural experiment: the end of the “professor’s privilege” in Norway, where university researchers previously enjoyed full rights to their innovations. Upon the reform, Norway moved toward the typical U.S. model, where the university holds majority rights. Using comprehensive data on Norwegian workers, firms, and patents, the researchers find a 50% decline in both entrepreneurship and patenting rates by university researchers after the reform. Quality measures for university start-ups and patents also decline. Applications to literatures on university technology transfer, innovation incentives, and taxes and entrepreneurship are considered.

This paper has been published in the American Economic Review.

Hans Hvide, Professor of Economics and Finance, University of Bergen

Benjamin Jones, Gordon and Llura Gund Family Professor of Entrepreneurship, Professor of Strategy, and IPR Associate, Northwestern University

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