Monthly Archives: February 2009

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

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.

Changing the Numbers: UK Directory Enquiries Deregulation and the Failure of Choice

A couple of weeks ago I was back at City University’s Centre for Competition and Regulatory Policy for their winter workshop to present a new paper. Entitled Changing the Numbers: UK Directory Enquiries Deregulation and the Failure of Choice it looked at what happened when the UK deregulated its directory enquiries market in the early 2000s. From the abstract:

In 2003, the UK `liberalised’ its telephone directory enquiries service with the aim of introducing competition so as to improve quality and lower costs. Unfortunately the results did not match expectations. Proliferation of numbers led to consumer confusion and high price firms with no discernible quality advantages but which employed heavy advertising came to dominate the market. Consumer and total welfare appear to have declined. This example raises important questions for regulators. In particular, with limits on information and rationality, it may sometimes be better to limit choice but increase competition to supply that choice.

Link to Paper

Revolutionary Road

6.5/10. Builds to a powerful climax from a rather ropey start — continually improving largely thanks to an excellent performance by Winslet. It would have been even better but for a script that occasionally slews into bathos (perhaps the fault of the original book which is rather old) and a very weak performance by DiCaprio. (As time goes by, it becomes increasingly apparent that he, like Tom Cruise, is not an actor. He possesses only a limited repertoire of facial expressions and modes of speech which are trotted out performance after performance have in the process becoming both predictable and monotonous).

It was also a shame that the final two minutes weren’t cut so that the film ended on DiCaprio’s twilight running. This marks such a natural endpoint that I even wonder whether the final 2 minutes were tacked on at studio insistence to soften what would otherwise have been a rather harsh ending — but one which would have been all the more powerful for that.

New Open Access Journals from the Econometric Society

As a member of the Econometric Society I received yesterday the following announce:

The Council and the Fellowship of the Econometric Society have both voted in favor of a plan for the Society to publish two open-access journals: Quantitative Economics (QE) and Theoretical Economics (TE). All voting Council members were in favor of the proposal. Among the active Fellows, 277 (66.4% of the total) cast their ballots, with 240 votes (86.6%) in favor, 30 (10.8%) against, and 7 (2.5%) abstentions. An announcement together with a description of the new journals may be found in .

QE will be started from scratch and its first issue is planned for 2010. TE has been published by the Society for Economic Theory ( ), but is to be adopted by the Econometric Society later this year. The first issue in 2010 will be the first one as a Society journal.

This is great news.