The responsiveness of inventing: evidence from a patenting fee reform

Study of the effect of the 1884 reform (from 25 to 4 pounds) Reform was studied by Nicholas (2011) who found effect on propensity but not on quality (renewals and citations). Nicholas: sample of random patents (1878-1888), 20% (13,833) This paper: 42,500 patents (1879-1888) finds a strong effect on effort and quality

Historical setting “Climacteric” (slowdown of Britain’s after the IR; catching up and forging ahead of Germany and US) Data on aggregate productivity and on manufacturing do not seem to indicate acceleration of innovation.

TABLE 1: Growth of Aggregate GDP per Hour Worked (% per annum)

TABLE 4: Comparative Levels of Labour Productivity in Manufacturing (UK Output per Employee = 100)

TABLE 2: Comparative levels of GDP per capita (US = 100)

Some questions Sectoral evidence ? Did the reform determine sectoral shifts (eg, lock-in in the sector of the first IR)? If returns of innovation are uncertain reduction of the fee may be used to prolong patents or take patents in the US. Is this contemplated in the model?

Biological Innovation without IPRs: Cotton Breeding in the Antebellum American South

The missing chapter? Well before plants received patent protection there was a plethora of private sector inventive activity, where leading farmers and seed companies made significant contributions to plant improvement. State and federal agencies significantly added to this brew. Animal breeders were at least as active, and many developed national markets for their creations. A large and important literature has identified inventions with patents. The absence of patent records for a large class of biological activities has led to the inference that little has happened. However a search of the press, farm journals, Patent Commission reports, and various state and federal commission reports suggests that innovators were making great strides in the introduction of new and more productive plants and animals. Olmstead, A. and Rhode, P., (2008), Creating Abundance. Biological Innovation and American Agricultural Development, Cambridge, Cambridge University Press.

Historical case-study of innovation in the cotton seed market Another “significant” case of innovation without IP in the XIX century Price of seeds variety reflects dynamics of innovation and imitation (innovators lead time is enough to recoup investment in R&D) Seeds are “experience” goods => importance of reputation Complex ecology with 3 types of seed breeders: - core: “a stable set of producers of standardized high-quality varieties” - fringe 1: “one-time discoverers or importers of new varieties” - fringe 2: “the third camp combined attributes of the other two, working systematically to breed a series of new better cottons…Some in this group tied their seed business with other commercial endeavors such as selling fertilizer or publishing farm journals” Questions “humbugs” are from fringe 1? Or actually we have four camps? relative size of the camps? Evolving of our time? Single breeders could change camps Knowledge sharing only in fringe 2 ? How important for innovation ? Is Allen’s notion of “collective invention” relevant in this case (also in Allen’s case, reputation was very important…)

Implications Historical case different from current environment (R&D costs are much higher) Innovation model is endogenous Performance of new innovation model settings is not obvious (more exploitation than exploration,…) Campi & Nuvolari (2015)