Title: Why are researchers paid bonuses? On technology spillovers and market rivalry
Authors: D'ANDRIA DIEGO
Citation: RESEARCH POLICY vol. 45 no. 10 p. 2105-2112
Publisher: ELSEVIER SCIENCE BV
Publication Year: 2016
JRC N°: JRC102697
ISSN: 0048-7333
URI: http://www.sciencedirect.com/science/article/pii/S0048733316301342
http://publications.jrc.ec.europa.eu/repository/handle/JRC102697
DOI: 10.1016/j.respol.2016.08.006
Type: Articles in periodicals and books
Abstract: A temporary change in pay to employed inventors around the time of patent application has been documented. A theoretical model is here developed to provide an explanation to said findings based on the idea that inventors may be able to use the knowledge previously generated while working in a firm, in a rival company. The model features firms who hire workers in R&D functions to make product innovations. The innovation process consists of distinct phases each with different access to information about the innovation value for firms. Firms compete to attract workers, and workers can transfer part of the generated new knowledge to a new employer. Results suggest that the capital intensity of R&D investments, and the type and size of knowledge spillovers, may affect the probability to observe bonus pay at the time of a patent application. Different tax incentives and subsidies are then studied as a means to correct for possible under-investment of capital. We study the effect of a patent box, a subsidy to R&D capital investments, and a subsidy to bonus pay. When market rivalry prevails over positive knowledge externalities, a bonus pay incentive was found to obtain the social first-best while a patent box or a subsidy to capital investment would cause overinvestment. When positive knowledge externalities prevail, either a patent box or a subsidy to capital investment obtain the social optimal level of capital investments.
JRC Directorate:Growth and Innovation

Files in This Item:
There are no files associated with this item.


Items in repository are protected by copyright, with all rights reserved, unless otherwise indicated.