The Rate and Direction of Inventive Activity Revisited A National Bureau of Economic Research Conference Report The Rate and Direction of Inventive Activity Revisited Edited by Josh Lerner and Scott Stern The University of Chicago Press Chicago and London Josh Lerner is the Jacob H Schiff Professor of Investment Banking at Harvard Business School, with a joint appointment in the Finance and the Entrepreneurial Management Units, and a research associate and codirector of the Productivity, Innovation, and Entrepreneurship Program at the National Bureau of Economic Research Scott Stern is the School of Management Distinguished Professor of Technological Innovation, Entrepreneurship, and Strategic Management at the Massachusetts Institute of Technology Sloan School of Management and a research associate and director of the Innovation Policy Working Group at the National Bureau of Economic Research The University of Chicago Press, Chicago 60637 The University of Chicago Press, Ltd., London © 2012 by the National Bureau of Economic Research All rights reserved Published 2012 Printed in the United States of America 21 20 19 18 17 16 15 14 13 12 ISBN-13: 978-0-226-47303-1 (cloth) ISBN-10: 0-226-47303-1 (cloth) Library of Congress Cataloging-in-Publication Data The rate and direction of inventive activity revisited / edited by Josh Lerner and Scott Stern pages ; cm.—(National Bureau of Economic Research conference report) Includes bibliographical references and index ISBN-13: 978-0-226-47303-1 (cloth : alkaline paper) ISBN-10: 0-226-47303-1 (cloth : alkaline paper) Inventions— Congresses Technological innovations—Economic aspects— Congresses Discoveries in science—Congresses Academicindustrial collaboration—Congresses I Lerner, Joshua II Stern, Scott, 1969– III.Series: National Bureau of Economic Research conference report HC79.T4R385 2012 338.′064—dc23 2011029618 o This paper meets the requirements of ANSI/NISO Z39.48-1992 (Permanence of Paper) National Bureau of Economic Research Officers Kathleen B Cooper, chairman Martin B Zimmerman, vice-chairman James M Poterba, president and chief executive officer Robert Mednick, treasurer Kelly Horak, controller and assistant corporate secretary Alterra Milone, corporate secretary Gerardine Johnson, assistant corporate secretary Directors at Large Peter C Aldrich Elizabeth E Bailey John H Biggs John S Clarkeson Don R Conlan Kathleen B Cooper Charles H Dallara George C Eads Jessica P Einhorn Mohamed El-Erian Linda Ewing Jacob A Frenkel Judith M Gueron Robert S Hamada Peter Blair Henry Karen N Horn John Lipsky Laurence H Meyer Michael H Moskow Alicia H Munnell Robert T Parry James M Poterba John S Reed Marina v N Whitman Martin B Zimmerman Directors by University Appointment George Akerlof, California, Berkeley Jagdish Bhagwati, Columbia Timothy Bresnahan, Stanford Alan V Deardorff, Michigan Ray C Fair, Yale Franklin Fisher, Massachusetts Institute of Technology John P Gould, Chicago Mark Grinblatt, California, Los Angeles Bruce Hansen, Wisconsin–Madison Marjorie B McElroy, Duke Joel Mokyr, Northwestern Andrew Postlewaite, Pennsylvania Uwe E Reinhardt, Princeton Craig Swan, Minnesota David B Yoffie, Harvard Directors by Appointment of Other Organizations Bart van Ark, The Conference Board Christopher Carroll, American Statistical Association Jean-Paul Chavas, Agricultural and Applied Economics Association Martin Gruber, American Finance Association Ellen L Hughes-Cromwick, National Association for Business Economics Thea Lee, American Federation of Labor and Congress of Industrial Organizations William W Lewis, Committee for Economic Development Robert Mednick, American Institute of Certified Public Accountants Alan L Olmstead, Economic History Association John J Siegfried, American Economic Association Gregor W Smith, Canadian Economics Association Directors Emeriti Andrew Brimmer Glen G Cain Carl F Christ George Hatsopoulos Saul H Hymans Lawrence R Klein Paul W McCracken Rudolph A Oswald Peter G Peterson Nathan Rosenberg Relation of the Directors to the Work and Publications of the National Bureau of Economic Research The object of the NBER is to ascertain and present to the economics profession, and to the public more generally, important economic facts and their interpretation in a scientific manner without policy recommendations The Board of Directors is charged with the responsibility of ensuring that the work of the NBER is carried on in strict conformity with this object The President shall establish an internal review process to ensure that book manuscripts proposed for publication DO NOT contain policy recommendations This shall apply both to the proceedings of conferences and to manuscripts by a single author or by one or more coauthors but shall not apply to authors of comments at NBER conferences who are not NBER affiliates No book manuscript reporting research shall be published by the NBER until the President has sent to each member of the Board a notice that a manuscript is recommended for publication and that in the President’s opinion it is suitable for publication in accordance with the above principles of the NBER Such notification will include a table of contents and an abstract or summary of the manuscript’s content, a list of contributors if applicable, and a response form for use by Directors who desire a copy of the manuscript for review Each manuscript shall contain a summary drawing attention to the nature and treatment of the problem studied and the main conclusions reached No volume shall be published until forty-five days have elapsed from the above notification of intention to publish it During this period a copy shall be sent to any Director requesting it, and if any Director objects to publication on the grounds that the manuscript contains policy recommendations, the objection will be presented to the author(s) or editor(s) In case of dispute, all members of the Board shall be notified, and the President shall appoint an ad hoc committee of the Board to decide the matter; thirty days additional shall be granted for this purpose The President shall present annually to the Board a report describing the internal manuscript review process, any objections made by Directors before publication or by anyone after publication, any disputes about such matters, and how they were handled Publications of the NBER issued for informational purposes concerning the work of the Bureau, or issued to inform the public of the activities at the Bureau, including but not limited to the NBER Digest and Reporter, shall be consistent with the object stated in paragraph They shall contain a specific disclaimer noting that they have not passed through the review procedures required in this resolution The Executive Committee of the Board is charged with the review of all such publications from time to time NBER working papers and manuscripts distributed on the Bureau’s web site are not deemed to be publications for the purpose of this resolution, but they shall be consistent with the object stated in paragraph Working papers shall contain a specific disclaimer noting that they have not passed through the review procedures required in this resolution The NBER’s web site shall contain a similar disclaimer The President shall establish an internal review process to ensure that the working papers and the web site not contain policy recommendations, and shall report annually to the Board on this process and any concerns raised in connection with it Unless otherwise determined by the Board or exempted by the terms of paragraphs and 7, a copy of this resolution shall be printed in each NBER publication as described in paragraph above Contents Introduction Josh Lerner and Scott Stern I Panel Discussion: The Impact of the 1962 RATE AND DIRECTION Volume, a Retrospective Why Was Rate and Direction So Important? Nathan Rosenberg and Scott Stern Some Features of Research by Economists on Technological Change Foreshadowed by The Rate and Direction of Inventive Activity Richard R Nelson The Economics of Inventive Activity over Fifty Years Kenneth J Arrow 27 35 43 II The University-Industry Interface Funding Scientific Knowledge: Selection, Disclosure, and the Public-Private Portfolio Joshua S Gans and Fiona Murray Comment: Suzanne Scotchmer 51 vii viii Contents The Diffusion of Scientific Knowledge across Time and Space: Evidence from Professional Transitions for the Superstars of Medicine Pierre Azoulay, Joshua S Graff Zivin, and Bhaven N Sampat Comment: Adam B Jaffe The Effects of the Foreign Fulbright Program on Knowledge Creation in Science and Engineering Shulamit Kahn and Megan MacGarvie Comment: Paula E Stephan 107 161 III Market Structure and Innovation Schumpeterian Competition and Diseconomies of Scope: Illustrations from the Histories of Microsoft and IBM Timothy F Bresnahan, Shane Greenstein, and Rebecca M Henderson Comment: Giovanni Dosi How Entrepreneurs Affect the Rate and Direction of Inventive Activity Daniel F Spulber Comment: Luis Cabral Diversity and Technological Progress Daron Acemoglu Comment: Samuel Kortum Competition and Innovation: Did Arrow Hit the Bull’s Eye? Carl Shapiro Comment: Michael D Whinston 203 277 319 361 IV The Sources and Motivations of Innovators Did Plant Patents Create the American Rose? Petra Moser and Paul W Rhode Comment: Jeffrey L Furman The Rate and Direction of Invention in the British Industrial Revolution: Incentives and Institutions Ralf R Meisenzahl and Joel Mokyr Comment: David C Mowery 413 443 Contents 10 The Confederacy of Heterogeneous Software Organizations and Heterogeneous Developers: Field Experimental Evidence on Sorting and Worker Effort Kevin J Boudreau and Karim R Lakhani Comment: Iain M Cockburn ix 483 V Panel Discussion: Innovation Incentives, Institutions, and Economic Growth The Innovation Fetish among the Economoi: Introduction to the Panel on Innovation Incentives, Institutions, and Economic Growth Paul A David Innovation Process and Policy: What Do We Learn from New Growth Theory? Philippe Aghion 509 515 VI The Social Impact of Innovation 11 The Consequences of Financial Innovation: A Counterfactual Research Agenda Josh Lerner and Peter Tufano Comment: Antoinette Schoar 12 The Adversity/Hysteresis Effect: Depression-Era Productivity Growth in the US Railroad Sector Alexander J Field Comment: William Kerr 13 Generality, Recombination, and Reuse Timothy F Bresnahan Comment: Benjamin Jones 523 579 611 VII Panel Discussion: The Art and Science of Innovation Policy The Art and Science of Innovation Policy: Introduction Bronwyn H Hall 665 Putting Economic Ideas Back into Innovation Policy R Glenn Hubbard 669 Author Index Abate, J., 245n59 Abramovitz, M., 28, 29 Acemoglu, D., 323, 444n2, 614 Acs, Z J., 279, 283, 285 Adner, R., 204n4, 323 Adrian, T., 568 Agarwal, A., 115n5, 118 Aghion, P., 17, 97, 108, 115, 322, 322n4, 351, 362n1, 370, 371n10, 372, 372n13, 373, 374n18, 380, 381, 387, 405, 407, 515, 516, 517, 518, 676n3 Agrawal, A., 109, 163, 466n44 Alcácer, J., 117, 145 Alexander, J., 532 Allen, F., 528 Allen, R C., 444, 471, 474, 480, 480n1 Allyn, R S., 416, 417, 418, 418n8 Almeida, P., 108, 109n1, 112 Alonso, R., 214n12, 267 Alston, J M., 414, 414n1 Alva, M., 643 Anand, B., 206n8, 214, 283, 395nn38–40, 395n42, 396n43, 398, 398n45 Anand, G., 394n35, 395 Andrade, G., 554 Anton, J J., 206n8, 214, 279, 285 Armstrong, J., 281 Arora, A., 282, 283 Arrow, K J., 16, 30, 31, 51, 204n2, 278, 285, 294, 311, 362, 395, 405 Arthur, W B., 322, 322n4 Ashcraft, A B., 565n21 Aspray, W., 630n15, 633, 634, 638n28 Audretsch, D B., 279, 281, 282, 283 Axelson, U., 553 Azoulay, P., 67, 115, 115n5, 146n14 Baer, R., 430n24 Baker, G., 206n8, 214 Baker, J., 362, 369n8, 371n11 Balconi, M., 285 Banal-Estañol, A., 98 Bank, D., 252n69, 258n77, 262n81, 263n82 Barber, B., 563 Barger, H., 587, 589, 601 Barker, T C., 454 Barlow, A., 454 Bartelsman, E., 377 Bartol, K., 485 Baumol, W J., 46, 279, 652 Becker, M., 273n5 Becker, S O., 461n34 Beecham, S., 485, 485n3 Belenzon, S., 108 Ben-Horim, M., 524 Benjamin, J., 566 Berg, M., 447n10 Bergstresser, D., 561 Berndt, A., 565n21 Berners-Lee, T., 245n59 Berry, S., 528n1 Bhattamishra, R., 569 Biagioli, M., 56 Bimpikis, K., 323 689 690 Author Index Birdzell, L E., 46 Birse, R M., 461n36 Blackwell, M., 121 Blonigen, B A., 283 Bloom, N., 378, 379, 547 Blumenthal, D., 71, 79 Blundell, R., 380n24 Boone, J., 372 Bottazzi, G., 272n4 Boudreau, K J., 484, 487, 487n4, 493n10 Bramoullé, Y., 323 Branstetter, L., 108 Bresnahan, T F., 209, 215n13, 223n25, 224n28, 238n50, 251n68, 253n70, 254n71–72, 258n76, 283n2, 286, 523, 528n1, 612, 636n24, 637, 637n26 Brewer, M B., 110, 115, 143, 281 Brock, W., 323 Bronfenbrenner, M., 323 Brooks, F P., 484, 485 Bulow, J., 409 Bunzl, M., 537 Burnley, J., 454 Burt, R S., 144, 531 Bush, V., 53 Butler, L J., 413 Cameron, R., 536 Campbell, J., 562 Campbell-Kelly, M., 630n15, 633, 634, 638n28 Cardwell, D S L., 456, 459 Carr, E., 537 Carroll, P., 215n13, 222n23, 226n33, 236n44, 237n47 Cassiman, B., 204 Cech, T R., 110 Ceruzzi, P E., 630n15, 638n28 Chalmers, J., 561 Chandler, A., 284 Chapman, S D., 454 Chen, Y., 279n1 Chevalier, J., 554 Chposky, J., 222n23, 226n33 Christensen, C M., 283n3, 323, 366 Clark, G., 444 Clark, H A., 283 Clark, K., 204n6, 283n3, 426 Cockburn, I., 109, 110, 163 Cohen, M D., 273n5, 362n1 Cohen, W M., 145, 375, 379, 381 Cole, S., 569 Coleman, J., 531 Copeland, A., 28 Corder, L., 427n19 Couger, J D., 485 Coval, J., 565n21 Cowan, R., 537 Cozzi, G., 322n4 Crane, D., 526 Cringley, R X., 215n13, 221n21, 242 Crosby, A., 319n1 Crouzet, F., 454n26 Cunningham, E., 428, 429 Cusumano, M., 242, 248n63, 253n70, 484, 484n2, 650 Daft, R L., 204n6 Dalle, J.-M., 323 Danaher, P J., 286 Darby, M R., 110, 115, 143, 281 Dasgupta, P., 45, 52, 53, 71, 72, 108, 529 Daus, D D., 414, 417 David, P., 45, 52, 53, 71, 72, 105, 108, 224n28, 539, 676n3 Davis, G., 536 Davis, R A., 286, 366 Davis, S J., 204n3, 548, 553 Day, L., 454 Demsetz, H., 376 Denison, E., 29 de Solla Price, D J., 111 Dessein, W., 214n12, 267 Dewan, S., 566 Dewatripont, M., 97, 323 Dhar, T., 414 Ding, W., 115 Djankov, S., 666 Doms, M., 377 Dosi, G., 205n7, 271n1, 272n2, 273n6, 274, 322, 322n4, 323 Durlauf, S., 323 Dutton, H I., 459 Eichengreen, B., 427n19 Enos, J., 31, 44, 445n6, 479, 481 Ericson, R., 407 Erkal, N., 105 Faillo, M., 272n2 Fairbairn, W., 448n12 Fallick, B., 112 Fang, L., 552 Farnie, D A., 452 Author Index Farrell, J., 391 Fein, A J., 283n3 Felkin, W., 465 Ferguson, N., 537 Field, A J., 579, 580, 580n1, 582 Finch, C., 583 Fink, M., 554n10, 561 Finn, M G., 175 Fisher, F., 217n16, 219n19, 254nn71–72, 258n76 Fitton, R S., 447n11 Flattau, P E., 173 Fleischmann, C A., 112 Fleming, L., 112, 148, 618 Fogarty, M S., 117, 145 Fogel, R., 539 Foltz, J., 414 Foray, D., 537, 675n1, 676nn3–4 Fosfuri, A., 283 Fowler, C., 415 Fox-Kean, M., 108 Frame, W., 524, 564n18 Francis, A J., 466 Freiberger, P., 215n13, 221n21, 630n15, 638n28 Fuller, A W., 149 Furman, J., 73, 84, 92, 115, 282 Galambos, L., 282 Gale, D., 528 Gale, K W V., 450n18 Galetovic, A., 206n8, 214 Gambardella, A., 282, 283 Gans, J S., 52, 54, 71, 72, 87, 98, 278, 279, 401n53 Gates, B., 224n27, 249n65, 648 Gavetti, G., 204n6 Gawer, A., 204n2 Geanakoplos, J., 409 Gennaioli, N., 532 Gerstner, L V., 238n51 Giarratana, M S., 283 Gibbons, R., 206n8, 214 Gilbert, R., 204n2, 279, 317, 362, 362n1, 366, 367, 381, 382, 386, 387n31, 389n31 Giné, X., 569 Gioia, V G., 430n23 Gittelman, M., 117, 145 Glab, J., 283n3 Goetzmann, W., 524, 526, 536, 554n10 Goldberger, M L., 173 Gordon, R J., 580 691 Gorodnichenko, Y., 666 Gorton, G., 568 Gowrisankaran, G., 408 Graff Zivin, J., 67, 115, 146n14 Graham, S J H., 462, 466n43 Granovetter, M., 531 Green, J., 71, 105 Greenspan, A., 529 Greenstein, S., 209, 215n13, 223n26, 224n28, 238n50, 245n59, 256nn73–74, 279n1, 286, 630n15, 637, 637nn26–27 Greenwood, J E., 217n16 Griffin Lewis, G., 424 Griffith, R., 270, 362n1, 372, 373, 374n18, 380n24 Griffiths, J., 447, 461n35 Griffiths, T., 451, 459 Griliches, Z., 28, 44 Grindley, P C., 283 Groopman, J., 53 Grossman, G., 322, 351, 357 Grove, A., 382 Gupta, A., 565n21 Haack, S., 79 Haigh, T., 219n18 Hall, B H., 665, 675n1 Harkness, J L., 414, 423, 425, 428, 429 Harrigan, K R., 645 Harris, J R., 448, 450, 454 Hart, G M., 427 Hart, O., 206n8, 214 Hasek, R F., 422 Hausman, J., 528n1 Hayek, F A., 612, 618 Heaton, H., 454 Helfat, C., 272n3 Hellman, T., 545 Helpman, E., 322, 351, 357, 523 Hendershott, P., 566 Henderson, R M., 94, 108, 110, 117, 118, 119, 204n2, 204n6, 209, 267n84, 282, 283n3, 286 Henderson, W O., 448, 454n26 Hillaire-Pérez, L., 447n10 Hoberg, G., 550 Hoffman, M., 565n21 Holmes, T., 378, 378n21 Holmstrom, B., 17, 206n8, 214, 497n15 Honeyman, K., 454n26 Hong, L., 323 Hornung, E., 461 692 Author Index Howitt, P., 108, 322, 322n4, 351, 362n1, 372, 372n13, 515, 517 Hsu, D H., 278 Huang, K., 53 Humphries, J., 449, 456 Hunt, P A., 451, 459, 461n35 Iansiti, M., 484n2 Ihnen, L A., 413 Irwin, D., 427n19 Ivashina, V., 552 Jacks, D., 444 Jacob, M C., 451 Jaffe, A B., 94, 108, 117, 119, 129n9, 145, 150 James, F A J L., 444n3 Jameson, M., 566 Janis, M., 414n1 Jenkins, D T., 454 Jennet, S., 422, 425, 428, 429 Jensen, M., 554 Jiangli, W., 568 Johnson, D., 419n10, 525 Johnson, S., 525 Jones, B F., 323, 615 Jones, P M., 450n19, 452 Jovanovic, B., 204n4, 612 Judson, H F., 61 Juhl, T., 419n10 Jurek, J., 565n21 Kane, E., 533 Kaplan, S., 204n6, 267n84, 542, 554 Kaplow, L., 400n51 Karlan, D., 569 Kato, A., 283 Katz, B., 217n16 Katz, E., 531 Katz, M L., 279, 322, 362, 368, 369n7, 387n31, 389, 389n31, 390n32, 393 Keilbach, M C., 279 Kendrick, J., 590 Kenny, M., 96 Kesan, J., 414n1 Kevles, D J., 415 Khan, B Z., 447, 469 Khandani, A., 29 Khanna, T., 283 Khorana, A., 537 Kile, O M., 414, 418n8, 429, 430 Killen, M., 239 Kimes, B R., 283 Kindleberger, C., 536 King, M., 484 Kitch, E W., 71 Klapper, L., 666 Klemperer, P., 409 Klepper, S., 204n4 Klette, T J., 287, 675n2 Kline, S J., 284 Kloppenburg, J R., Jr., 415 Kneen, O H., 426, 429n21 Koepp, S., 643 Kogut, B., 108, 109n1, 112 Kortum, S., 20, 287, 545 Krugman, P., 108, 524 Kuhn, T., 45 Kunnings, K A., 413 Kuznets, S., 44, 108, 144 Kwok, J., 525 Kyrillos, B., 556 Lacetera, N., 487, 487n4, 493n10 Laeven, L., 524, 666 Lakhani, K R., 484, 485, 487, 487n4, 493n10 Lamoreaux, N R., 422, 550 Lampe, R L., 419n10 Langlois, R N., 215n13, 630n15, 638n28 Lazaric, N., 273n5 Lebow, R., 537 Lee, C.-Y., 379, 380, 381 Lehmann, E E., 279 Leibenstein, H., 378 Lemley, M., 103, 145 Leonsis, T., 222n23, 226n33 Lerner, J., 20, 484, 524, 526, 532, 545, 548, 552 Levenstein, M., 550 Levin, R., 379n22 Levin, S., 162, 323 Levine, D., 378 Levine, R., 524 Levinsohn, J., 528n1 Levinthal, D., 274, 323 Lewis, W., 377 LiCalzi, M., 323 Litan, R E., 96, 279, 525 Lo, A., 529 Lockett, A., 281, 282 Lorenz, E., 273n5 Loscher, U., 430 Lotka, A J., 111 Author Index Loutskina, E., 564n17 Lowe, R., 280 Lowe, W C., 222n22, 222n24, 225n30, 229n36 Lucking-Reilly, D., 283 MacCrisken, J., 204n3 Mace, M., 653 MacGarvie, M., 282 Machlup, F., 30, 71 Macho-Stadler, I., 98 MacLeod, C., 454n27, 459 MacRoberts, B., 144, 145 MacRoberts, M H., 144 Maher, B A., 173 Mairesse, J., 675n1 Majeski, S., 537 Malerba, F., 323, 630n15, 636n24, 637n27 Mancke, R B., 217n16, 219n9 Maney, K., 283n3 Manso, G., 67, 146n14 Marburger, J H., 108 Marengo, L., 272n2, 274, 323 Marion, B W., 413 Marsden, R., 447n11, 454n26 Martin, D., 485 Marx, M., 112, 148 Mason, S., 530 Matouschek, N., 214n12, 267 Maurer, S., 73n24, 96, 98 Mayer, C., 565n21 McClellan, P., 539 McClellan, S T., 283n2 McCloskey, D N., 443 McConnell, A., 265n41 McFarland, J H., 417 McGowan, J J., 217n16 McGredy, S., 422, 425, 428, 429 McHale, J., 109, 163 McKie, J W., 217n16, 219n9 McNeil, D., 454 Meilland, A., 428 Melamed, R., 148 Mensch, G., 582 Menzel, H., 531 Merton, R K., 50, 108, 144, 423, 526, 529, 530 Metrick, A., 568 Mian, A., 565n21 Michalak, T., 568 Michalopoulos, S., 524 Milgrom, P., 291 693 Miller, M., 523, 533 Miller, N., 401n53 Milton, J., 46 Minsky, H., 579 Mishra, P., 525 Mitch, D., 445 Mitchell, L., 96 Møen, J., 675n2 Mokyr, J., 53, 70, 443, 444, 444n2, 446n8, 449, 450, 456, 462, 469, 473, 615 Mollica, M., 546 Morrison, S A., 283n3 Morrison-Low, A L., 454 Moser, P., 419n10, 422n11, 431 Motta, M., 366 Mowery, D C., 80, 94, 95, 245n59, 483 Mukherjee, A., 98 Murphy, K M., 204n3, 206n8, 214 Murray, F., 52, 54, 71, 72, 73, 84, 87, 92, 98, 323 Murray, G., 552 Musson, A E., 447n11, 452 Myhrvold, N., 224n27 Naseem, A., 414 Nelson, R R., 2, 5, 16, 31, 32, 52, 205n7, 271n1, 272n2, 322 Nerlove, M., 539 Newberry, D., 204n2, 279, 317, 386 Nickell, S., 380, 380n23 Nitschcka, T., 565n21 North, D., 457 Nuvolari, S., 454n27 O’Brien, P K., 451, 459, 461n35 Odean, T., 563 Oehmke, J F., 414 Olmstead, A L., 415 O’Reilly, C., 204n6 Orsenigo, L., 110 O’Shea, R., 280 Owen-Smith, J., 80 Ozdaglar, A., 323 Page, S E., 323 Pakes, A., 407, 528n1 Panetta, F., 567 Parisi, A A., 427n19 Parmalee, J H., 586 Patton, D., 96 Paxson, F L., 583 Pence, K., 565n21 694 Author Index Penrose, E., 71 Perrin, R K., 413 Persons, J., 530 Peterson, B S., 283n3 Petre, P., 217n16 Petrin, A., 428n1 Phillips, A., 217n16 Pirino, D., 272n4 Pisano, G., 110, 272n3 Piscitello, L., 272n4 Ponting, K G., 454 Popp, D., 419n10 Porter, M., 377 Posner, R., 582, 585n2 Pozzali, A., 285 Pozzsolo, A., 567 Prevezer, M., 281 Pritsker, M., 568 Pugh, E W., 217n16 Puri, M., 545 Purnanandam, A., 565n21 Raff, D M G., 283n2 Rajan, R., 666 Ramey, G., 279n1 Rantakari, H., 214n12, 235, 267 Raskovich, A., 401n53 Rasmusen, E., 295 Rebitzer, J B., 112 Reedy, E J., 96 Reinganum, J F., 279 Reynolds, P D., 666 Rhode, P W., 415 Richter, F., 586n7 Rimmer, G., 454n26 Rinearson, P., 224n27 Roach, M., 145 Robb, H C., Jr., 425 Roberts, J., 291 Roberts, P., 319n1 Robertson, P L., 630n15, 638n28 Robinson, E., 447n11, 452 Robinson, J., 444n2 Rogers, E., 531 Roll, E., 447, 448 Romer, P M., 53, 98, 108, 322, 337, 515, 517 Rosen, W., 446 Rosenberg, N., 31, 46, 284, 614, 625, 626 Ross, S., 528 Rossman, J., 415, 416 Rousseau, P., 612 Rouwenhorst, G., 524, 526, 536, 554n10 Rubinfeld, D., 254nn71–72, 258n76 Ryan, A., 564n15 Sacco, D., 372 Sadun, R., 547 Saint-Paul, G., 323 Salant, S W., 279 Sampat, B N., 94, 117, 145 Sarkisyan, A., 568 Say, J.-B., 279, 448n13 Schankerman, M., 108 Schiebinger, L., 71 Schimmelpfennig, D E., 414 Schmitz, J., 378, 378n21 Schmookler, J., 582 Schmutzler, A., 372 Schneiderman, B., 485 Schnitzer, M., 666 Schorr, P., 430n24 Schramm, C J., 279 Schuermann, T., 565n21 Schumpeter, J., 204n5, 279, 280, 363 Schwarcz, S., 530 Schwartz, M., 279n1 Scopelliti, A., 372 Scotchmer, S., 71, 73n24, 96, 98, 105, 320, 341n18, 617n9, 619 Segal, I., 401, 406 Selby, R., 484n2 Servaes, H., 537 Shapiro, C., 279, 322, 364, 369n8, 374n15, 391, 400n51 Sharp, H., 485 Shelanski, H., 362, 368, 369n7, 387n31, 389, 389n31, 390n32, 393 Sherburne, C., 222n22, 222n24, 225n30, 229n36 Sherlund, S., 565n21 Shiff, G., 148 Shiller, R., 565n21 Shilling, J., 566 Shin, H., 568 Shleifer, A., 532 Shuen, A., 272n3 Shy, O., 323 Siegel, I., 46 Siggelkow, N., 274 Silber, W., 524, 526 Simcoe, T., 245n59 Simonton, D K., 144 Author Index Singh, J., 115n5, 466n44 Singh, N., 291 Sink, E., 250n67 Sinnock, E P., 426 Sinofsky, S., 484n2 Sirmans, C., 566 Sirri, E., 563n14 Skempton, A W., 453 Slater, R., 555 Slivka, B., 246n61, 248n64, 249n65, 250n67 Smiles, S., 448, 454, 467n47 Smith, J S., 416 Sokoloff, K L., 422, 550 Solow, R., 28, 29 Sorenson, M., 548 Spulber, D F., 278, 279, 285 Stafford, E., 565n21 Stanley, A., 422 Stein, J., 97, 204n4, 323, 542, 552 Steinmueller, W E., 484 Stephan, P., 108, 162, 323 Stern, S., 52, 54, 71, 72, 73, 84, 87, 92, 98, 115, 278, 279 Stewart, A., 425 Stiglitz, J., 529 Stokes, D., 53, 54, 56 Stover, J F., 585, 585n3, 586, 586n6, 587 Strahan, P., 564n17 Strömberg, P., 547, 548 Stroup, A., 71 Strumsky, D., 112, 148 Stuart, T., 115, 115n5 Sturchio, J L., 282 Sufi, A., 565n21 Sunstein, C., 323 Surucu, O., 323 Sussman, H L., 454n26 Sutton, J., 210, 362n1, 375 Swaine, M., 215n13, 221n21, 630n15, 638n28 Swan, C., 71 Swecker, J P., 414, 424 Sylvan, D., 537 Syverson, C., 377, 378 Taylor, C T., 283 Teece, D J., 205n7, 272nn3–4, 283, 285 Temin, P., 444 Terry, D., 415, 418, 425 Tetlock, P., 537 Thomas, G C., 424 695 Thompson, P., 108 Thornton, R H., 454n26 Thursby, J., 149 Thursby, M., 149 Tilton, J E., 283 Tirole, J., 17, 322, 362n3, 484, 652 Tom, W., 387n31, 389n31 Townsend, R., 569 Trajtenberg, M., 94, 108, 117, 119, 145, 148, 150, 523, 528 Tripsas, M., 204n6 Trumbull, G., 564n15 Tufano, P., 524, 526, 527, 530, 533, 537, 555, 561, 563n14, 564n15 Turner, G., 454 Tushman, M., 204n6, 205n7 Ueda, M., 204n4 Uhde, A., 568 Ulmer, M., 589 Ungeheuer, F., 643 Usselman, S., 630n15, 636n24 van der Beek, K., 449 Van Reenen, J., 378, 379, 380n24, 547 Venner, R J., 414, 414n1 Viale, R., 285 Vickery, J., 569 Vishny, R., 532 Vives, X., 291, 372 Voena, A., 419n10 Vohora, A., 281, 282 Wadsworth, A P., 447n11 Waldinger, F., 19 Wallis, P., 449 Wang, J., 115 Wang, Y., 115n5 Warther, V., 530 Watson, T., Jr., 217n16 Weick, K E., 204n6 Weinberg, G M., 485 Weitzman, M L., 144, 615, 618 Wernerfelt, B., 210 West, J., 653 Weyl, E G., 652 Whinston, M., 401, 406 White, L., 524, 564n18 White, R P., 418, 431n25 Williams, H., 53 Willig, R D., 652 696 Author Index Wilson, I W., 286 Winchester, S., 444n3 Winston, C., 283n3 Winter, S G., 272n2, 273, 283, 322 Woessmann, L., 461n34 Wolf, R., 485 Woodcroft, B., 454 Wright, M., 281, 282 Wrigley, E A., 444 Yao, D., 206n8, 214, 279, 285 Yin, P.-L., 224n28, 251n68, 253n70, 254n71 Yoffie, D., 248n63, 253n70, 484n2, 650 Young, M A., 430n24 Zanchettin, P., 290, 291 Zawacki, R A., 485 Zemsky, P., 204n4 Ziedonis, A A., 94, 95, 280 Zingales, L., 546 Zlesak, D C., 423 Zucker, L G., 110, 115, 143, 281 Subject Index Page numbers followed by the letter f or t refer to figures or tables, respectively Adopters, 531–32 Adversity/hysteresis, 584 Agencies See Federal agencies Agency costs, innovation and, 17–18 Aiken, Howard, 633 Aiken project, 633 Alternative technologies, market economy and incentives for research in, 320 Amazon.com, 284, 287 American International Group (AIG), 211 American Research and Development (ARD), 540–41 America Online (AOL), 256–59, 647–48 Antitrust law, 400 Antitrust policy, innovation and, 19 Apple computer, 220, 222 Apple II computer, 639–40 Apprenticeship system, British Industrial Revolution and, 449, 456–57 Appropriability principle, 364, 365, 383, 387–89, 400–401 Arrow, Kenneth J., 14, 36, 51, 52, 278, 362– 66, 400, 401 Arrow effect, 364 Arrow replacement effect, 33, 384, 386 Article-to-article citation flows, 118, 132–38 Article-to-article citations, descriptive statistics for, 124t Assets, modeling shared, 210–15 Association of American Railroads, 587 Bayh-Dole Act (1980), 4, 72, 73; impact of, 94–97 Berners-Lee, Tim, 245n59 Bezo, Jeff, 284 Bill & Melinda Gates Foundation, 67–68 Blogs, 22 Boom periods, 579 Bohr’s Quadrant, 58, 60, 67 British Industrial Revolution, 9–10, 443–48; apprenticeship system and, 449, 456– 57; artisans and, 446–47, 467; clock and instrument makers in, 465–66; database for study of, 452–55; engineering profession in, 467; first-mover effects and, 462–65; importance of skills and competence, 448–52; importance of tweakers and, 447, 466–67; intellectual property rights and, 457–62; levels of activity driving innovation in, 446; mechanical culture of, 451–52; mechanical skills and, 447; nonpecuniary rewards and, 468–69; patents/patenting and, 459–62; prizes as incentives in, 450–51, 467–68; rate and direction of technological progress during, 474–75; reputation effects and, 465–66, 468; results for study of, 455–69; secrecy and, 462 See also Inventors Browsers, 650 Burbank, Luther, 416 697 698 Subject Index Business data processing (BDP), 630, 633, 637–38 Bust phases, 581–82 Cannibalization, 203–4, 208 Carey, Frank, 222, 225, 225n29, 225n30 Clark, William Tierney, 449 Clinical studies, 20 Coarse exact matching (CEM), 150–51, 152 Cockerill, William, 449 Collateralized Mortgage Obligation (CMO), 564 Competition policy: evidence on, 376–82; innovation and, 362, 370–76, 405; robust principles for, 382–89 Computers, 630, 632–34 Contestability principle, 364, 365, 383, 385–87, 395–96, 400–401 Corning Glass, 211 CP/M computers, 639, 640 Creative destruction, Schumpter’s concept of, 310 DARPA, 63–64, 76–78 Department of Defense (DOD): publication restrictions of, 78t; selection criteria for research of, 62–64; special disclosure provisions for defense funding of, 75–78 Diffusion: economic growth and, 3; questions on innovation and, 3; of science knowledge, 107–10 Digital Equipment Corporation (DEC), 219–20, 639 Direction, of innovation, Disclosure: commercialization and, 70–73; criteria for public funding, 73–75; of private-sector funders, 78–84; of research funding, 52, 53; strategies, 71–72 Diseconomies of scope, 6, 205–6, 208; avoiding, at IBM, 233–34; at Microsoft, 259–64; model of, 209–15 Diversification, technology transfer and, 285–87 Diversity, 319–23; equilibrium with no, 329– 32; technological progress, 341–45 Dominant firms, exclusionary conduct by, 400–401 Economic goods, innovation as, 30–31 Economic growth: impact of innovation and diffusion on, 3; innovation and, 1; technological change and, “Economic Welfare and the Allocation of Resources for Invention” (Arrow), 2, 30–31 Economoi, innovation fetish of, 509–14 Edison, Thomas A., 415–16 Edison’s Quadrant, 63 Electronic commerce (e-commerce), 641–44 Electronic communication (e-communication), 641, 645–46 Electronic content (e-content), 641, 644–45 Engineering profession, in British Industrial Revolution, 466–67 Entrepreneurial entry, 301 Entrepreneurial knowledge, 612–14; problem of, 651–52 Entrepreneurs: innovative, 277–78; Schumpeter’s, 284, 301, 308 Entrepreneurship, 277–80; incremental process inventions, 301; technology transfer versus, 280–87 Equilibrium, with no diversity, 329–32 Estridge, Don, 233–34 Externalities, innovation, 16–17 Facebook, 22 Federal agencies: disclosure criteria for, 73–75; public funding by, 58–67 Financial innovation, 523–24; background on, 525–27; challenge measuring social welfare, 528–30; challenge of dynamic impacts, 530–33; challenges for study of, 528; counterfactual approach to studying social welfare implications of systematic, 533–69; historical approach to, 536–40; lack of research on, 524; negative view of, 524; regulation and, 533; research approaches to, 525 See also Innovation First-mover effects, importance of, for British Industrial Revolution, 462–65 Fogel, Robert W., 538 Foundations See Philanthropic foundations Fulbright Foreign Student Program, 18, 162; background on, 164–66; conclusions regarding, 187–88; contribution of students of, to home countries, 184–87; creation of knowledge by students of, versus other foreign students, 177–83; data set for, 171–74, 188–94; foreign students and, 166–71; mobility of US-trained PhDs to foreign countries and, 174–77; regression results, 195–96; research about, 162–64 Subject Index Funding gap, 51, 52 Funding process, public institution methods of, 55–70 Gates, Bill, 224, 248–49, 249n66, 260 General Electric, 210 General purpose technologies (GPTs), 12, 13, 611–14; accidents and, 654; historical examples of, 630–35; as social costs, 623 General purpose technologies (GPTs) clusters: e-commerce, e-content, and e-communication, 652; examples of computer, 630–35; founding of, 623–30; PC industry and, 641–43; recombination and, 642 Genetech, Genzyme Corporation, 368–69, 394–98 Globalization, of innovation, 21 Golden Delicious apple trees, 415, 415f Google, Gould, Stephen Jay, 44 Government agencies See Federal agencies GPTs See General purpose technologies (GPTs) Grand Challenge Explorations program, 68–70 Great Depression, 582–83 Great Recession, 580 Harvard University, 83, 84n38 Hawthorne effects, 497, 498t HeartWare, 398–99 Holker, John, 448–49 Human Genome Project, 53 IBM See International Business Machines (IBM) Imports, challenge of dynamic, 530–33 Incremental process inventions, 301 Industrial Revolution See British Industrial Revolution Information technology GPTs, 630–31 Innovation: agency costs and, 17; allocation of research investment and, 3; appropriate measure of consequences of, 22; characterization of optimal policy for, 346–51; competition policy and, 362, 370–76, 405; direction of, 7–8; dynamics of industrial organization and, 33; as economic good, 30–31; economic growth and, 1, 3; economic research programs on, 2; economics 699 of, over fifty years by Arrow, 43–47; externalities, 16–17; fetish of, among economoi, 509–14; future agenda for study of, 20–22; general model, 351–55; globalization of, 21, 682–83; in GPTs, 628; innovator preferences and, 10; intellectual property rights and, 9; market structure and, 6–9; merger enforcement and, 389–400; microeconomics of, 28; modes of, 280; multidimensional, 277–78, 284–87, 310; new approaches for studying, 19–20; optimal technological progress for, 338–41; patent protection and, 19; positive externalities and, 320–23; questions on diffusion and, 3; questions on “open” research environments and, 3; as signal of competence, in British Industrial Revolution, 466; social impact of, 11– 13; tweakers and, 466 See also Financial innovation Innovation economics, reasons for difficulty translating, into policy prescriptions, 573–677 Innovation game, strategic, 287–88; basic framework of, 288–89; cooperation versus competition, 291–92; entrepreneurial entry and creative destruction, 289–91; equilibrium of, 292–305; with independent inventor and transferable production process, 305–10 Innovation policy: analysis of, 18–19; antitrust and, 19; art and science of, 665–66; Nelson-Arrow paradigm for, 679–84; putting economic ideas back into, 669–72 Innovation process, new growth theory and, 515–20 Innovation spiral, 530–32 Innovators: in biotech industry, 281; changing nature of incentives for, 21–22; countercultural nature of PC, 654; intellectual property rights as incentives and compensation for, 10; preferences of, innovation and research production and, 10; selecting entrepreneurship over licensing, 283; “sorting” influence and, 10; studies of academic and engineers, 280–82 Intellectual property (IP) protection, 679, 681–82 Intellectual property rights (IPRs), 413–14; British Industrial Revolution and, 700 Subject Index Intellectual property rights (IPRs) (cont.) 457–62; impact of, 19; as incentives and compensation for innovators, 10; innovation and, 9; under Plant Patent Act of 1930, 417–18 See also Patents International Business Machines (IBM), 206–9, 633, 634, 635–37; avoiding scope diseconomies at, 233–34; beginning of Schumpeterian wave for, 221; opensystems environment and, 235–39; before the PC, 216–20; PC business and, 211–12; PCjr and, 231–32; PC program of, 220–30; personal computing and, 215–39; similar diseconomies as Microsoft at, 264–66 Internet, 22, 239, 630, 641, 649–50; massmarket platform of, 651; as Schumpeterian wave, 245–59 Internet Explorer (IE), 250 See also Microsoft Internet Service Providers (ISPs), 255–57 Inventions: incremental process, 301; significant process, 301; threat of imitation and, 36 Invention Secrecy Act (1951), 75–76 Inventors, 278, 613; emergence of, in British Industrial Revolution, 450; incentives for, 450–51 See also British Industrial Revolution Jackson and Perkins Nursery, 415 Knowledge, types of, 612 Knowledge flows: discussion of study results, 143–45; econometric considerations, 128–29; effect of mobility on citation rates to articles and patents published before move, 132–43; effect of mobility on citation rates to articles published after the move, 129–32; measures of, 117–19; nonparametric matching procedure for, 119–28 Kuznets, Simon, 27, 28, 44, 45 Lack of diversity in research, 321; example of, 323–25; model of, 326–38 Land use regulation, 581 Left ventricular assist devices (LVAD), 398–99 Live Nation, 399–400 Locomotives, improvements in railroad, 585 Lowe, Bill, 222 Market knowledge, 612 Market structure, innovation and, 6–9 Massachusetts Institute of Technology (MIT), research contract of, 82–84 Merger enforcement, innovation and, 389– 400 Merger guidelines, innovation effects under, 391–94 Microsoft, 206–7, 208, 209, 212; AOL and, 256–59; decision to enter browser market and, 245–55; diseconomies of scope at, 259–64; history of, 242–43; Internet and managers at, 243–44; Internet Platform and Tools Division (IPTD) of, 252–53, 261–64; MSN and, 257–59; before Netscape’s browser, 241–45; as old firm in Schumpeterian wave, 248, 250; organization of, 244–45; response to Netscape’s browser, 239–41; similar diseconomies as IBM at, 264–66 Microsoft Network (MSN), 257–59, 647–48 Millwrights, production of, 449–50 Multidimensional innovation, 277–78, 310; technology transfer and, 284–87 Murdoch, William, 447, 466 Muris, Timothy, 394, 395, 396 Mutual funds: counterfactual histories of, 560–63; economic importance of US, 556–57; history of innovation in US, 554–56, 554n10; social welfare implications of, 557–60 National Cancer Institute (NCI), 53 National Institutes of Health (NIH), selection criteria for research of, 60–62 National Science Foundation (NSF), selection criteria for research of, 58–60 Nelson-Arrow paradigm, 15, 679–84 Netscape: competing with Microsoft, 251– 55; Microsoft’s response to browser of, 239––241; seizure of control of distribution of new channels by, 255–59 New combinations, Schumpeter’s, 277, 279, 284 New growth theory, innovation policy and, 515–20 New product design, transferable, 303–5 New production processes, transferable, 299–303 Nonexclusive royalty-free licenses (NERFs), 83–84 Subject Index Nontransferable technology, 295–99 Novazyme Pharmaceuticals Inc., 368–69, 394 See also Genzyme Corporation Olsen, Ken, 639 Opel, John, 225, 225n29 Openness gap, 52, 53 “Open” research environments, questions on innovation and, Panel discussions, 13–15 Passenger cars, improvements in railroad, 585–86 Pass-through mortgage backed security (MBS), 564 Pasteur’s Quadrant, 70–71 Patenting, 71, 82–84 Patent-paper pairs, 71, 72 Patents: early rose, 418–22; large nurseries and rose, 422–23; protection of, and innovation, 19 See also Intellectual property rights (IPRs) Patent system, 320 Patent-to-article citation flows, 118–19, 138 Patent-to-patent citation flows, 117–18, 138–43 PC industry, IBM and, 220–30 Personal computer (PC), 206–9, 630; invention of, as business tool, 638–41; invention of spreadsheet and, 640; invention of word processor and, 640 Philanthropic foundations: disclosure for, 73–75; public funding by, 67–70 Planned initiatives, 635–41; as coordination device, 646–48; reasons for failure of, 648–49 Plant Patent Act (1930), 9, 413–16, 416; intellectual property rights under, 417–18 Plant patents, creation of domestic plant breeding industry and, 427–29 Plant Variety Protection Act (PVPA), 413 Pompe disease, 394, 395 Pooling, 563 Positive externalities, innovation and, 320–23 Private equity: counterfactual approach to, 550–53; history of, 540–43; limitations of studies of, 553–54; social impact of, 547–50 Private funding: model of, 84–97; pure, 87–89 See also Public funding 701 Prizes, as incentives, in British Industrial Revolution, 450–51, 467–68 Product control groups, construction of, 150–53 Publication disclosure, 71, 72; of privatesector funders, 81–82 Public funding, 89–94; disclosure criteria for, 73–75; by federal agencies, 58–67; model of, 84–97; by philanthropic foundations, 67–70; special disclosure provisions for defense funding, 75–78 See also Private funding Public institutions, funding process of, for projects, 55–70 PubMed references, linking patents to, 149–50 Pure applied research, 56 Pure basic research, 56 Radical technological change, 204 Railroads, 584–85; employees (1919–1941), 592–94, 593f; firm-level analysis, 598–604, 599–600t; freight car miles (1920–1946), 594, 595f; freight cars installed and retired (1919–1942), 590– 92, 591f; gross investment in equipment and structures (1919–1942), 590–91, 590f; improvements in, during Depression, 586; improvements in locomotives, 585; improvements in passenger cars, 585–86; locomotives installed and retired (1919–1942), 590–92, 591f; mileage under receivership, 588–89, 589f; miles of road constructed and abandoned (1921–1941), 592–94, 593f; organization innovation in, 586; passenger cars installed and retired (1919–1942), 590–92, 592f; passenger miles (1919–1946), 594, 596f, 598; productivity improvements in, during Depression, 587; trends in and contributors to productivity increase, 594, 597t; unlimited freight interchange, 586–87 Rate and Direction Conference, 27–30; features of research by economists on technological change foreshadowed by, 35–41 Rate and Direction volume, effect of, 27–30 Real Estate Mortgage Investment Conduit (REMIC) tax vehicle, 564 Recombinant technical change, 611 702 Subject Index Recombination, 12, 612, 613; accidents and, 654–55; e-commerce, e-content, and e-communication as triumph of, 651; GPT clusters and, 652; models of, 613n5, 615–23; triumphs of, 651; web browser and, 650 Regulation, financial innovation and, 533 Rennie, John, 467 Reputation effects, importance of, for British Industrial Revolution, 465–66 Research: Department of Energy (DOE), 64–67; discussion and agenda for contracts, 97–100; federal funding agencies for, 58–67, 59t; lack of diversity in, 321; policy-oriented, 683–84; pure applied, 56; pure basic, 56; selection criteria of Department of Defense (DOD) for, 62–64; selection criteria of National Institutes of Health (NIH) for, 60–62; selection criteria of National Science Foundation (NSF) for, 58–60; useinspired, 56 See also Scientific knowledge funding Research and development (R&D): neutrality versus targeting, 681; underinvestment in, 680–81 Research and development (R&D) organizations, organization of, 31–33 Research investment, allocation of, Research productivity, innovator preferences and, 10 Rose breeding, history of commercial, 423–27 Rose industry, 414; early plant patents and, 418–22 Rose patents, 418–22; large nurseries and, 422–23 Roses, registrations of, 429–34 Rostow, Walt W., 538 Savings and Loan crisis, 579 Schumpeter, Joseph, 6, 8, 36, 203, 204, 280, 363n4, 400, 401, 611; on competition and innovation, 405; creative destruction concept, 310; entrepreneur of, 284, 301, 308; on innovation, 363–64 See also “Waves of creative destruction” Schumpeterian competition, 33, 39, 206, 255, 369 Schumpeterian effect, 386, 516 Science and technology (S&T) policies, 679; globalization of innovation versus, 682–83 Scientific knowledge, diffusion of, 107–10 Scientific knowledge funding, 51–55; federal agencies and, 58; methods public institutions select projects for, 55–58 See also Research Scope diseconomies, 6, 205–6, 208; avoiding, at IBM, 233–34; at Microsoft, 259–64; model of, 209–15 Secrecy, 71–72; British Industrial Revolution and, 462 Securitization, 563; assessing social welfare implications of, 565–66; history and extent of, 563–65; identifying counterfactual alternatives, 566–69 Shared assets, modeling, 210–15 Significant process inventions, 301 Silverberg, Brad, 246 Slivka, Ben, 246, 249 Smartphones, 653 Smeaton, John, 466 Social welfare, challenge measuring, 528–30 Society of Arts, 451, 467 Software, 483–84; conclusions about heterogeneity of, 499–501 Software organizations: experimental design for study of heterogeneity of, 485–90; heterogeneity of, 485; heterogeneity of workers in, 484–85; results of experiment, 493–99; sample size of heterogeneity of, 490; variables for study of heterogeneity of, 491–93; variety of, 484 Sorting, influence of, 10 Spreadsheets, 640, 641 Sputnik satellite, Stark, Paul, 415 Stark Brothers Nursery, 415 Superstar scientists, 145–47; cumulative output of, 113–14, 113t; demographic characteristics of, 113–14, 113t; linking journal articles to, 147–48; linking patents to, 148–49; matching, with their output, 115–17; sample of, 111–14 Synergies principle, 365, 383, 389 Tax Reform Act (1986), 564 Technical knowledge, 612 Technological change See Innovation Technological progress: diversity and, 341– 45; optimal, innovation and, 338–41 Subject Index Technology transfer: diversification by incumbent firms and, 285–87; entrepreneurship versus, 280–87; multidimensional innovation and, 284–87 Thoratec/HeartWare, 398–99 Ticketmaster, 399–400 Total factor productivity (TFP), 28, 580, 583 Tranched structures, 564 Transport industry, research and product development efforts in, 319 Tweakers: enlightenment of, 469–73; importance of, in British Industrial Revolution, 447, 466–67; innovation and, 466 University-industry interface theme, 4–6 Use-inspired research, 56 of studies of, 553–54; social impact of, 543–47 Von Neumann, John, 632, 634n21 Watt, James, 447, 448, 466 “Waves of creative destruction,” Schumpeterian, 201, 205, 206, 207, 208, 220, 221; Internet and, 221, 245–59 Web browsers, 650 Web 2.0, 22 White-collar automation (WCA), 630, 632, 640, 643 Wilkinson, John, 447 Word processors, 640, 641 World Wide Web (WWW), 245, 245n59, 630, 650 YouTube, 22 Venture capital: counterfactual approach to, 550–53; history of, 540–43; limitations 703 Zoning, 581 .. .The Rate and Direction of Inventive Activity Revisited A National Bureau of Economic Research Conference Report The Rate and Direction of Inventive Activity Revisited Edited by Josh Lerner and. .. transcripts of their remarks The first panel— The Impact of the 1962 Rate and Direction Volume: A Retrospective”—explicitly linked the 1960 and 2010 conferences, and included commentaries by two of the. .. the times and the affiliation of a number of the authors with the RAND Corporation), there was a heavy emphasis on the nature of publicly funded innovation, particularly in the defense sector The