Emmanuel Dechenaux

Appropriability and Commercialization: Evidence from MIT Inventions

The effects of appropriability on invention have been well studied, but there has been little analysis of the effect of appropriability on the commercialization of existing inventions. Exploiting a database of 805 attempts by private firms to commercialize inventions licensed from the Massachusetts Institute of Technology (MIT) between 1980 and 1996, we explore the influence of several appropriability mechanisms on the commercialization and termination of projects to develop products based on university inventions. Our central hypothesis is that the relationship between a licensees decision to either terminate or commercialize the invention is driven by the current market value of the invention, as well as the option value of delaying its commercialization. We use a competing risks framework that allows for nonparametric heterogeneity and correlated risks. We find that better appropriability in the sense of more effective patent strength and secrecy has a strong negative effect on the hazard of license termination. The effectiveness of learning has a strong positive effect on the hazard of technology commercialization, while lead time has a negative effect.

Announced vs. Surprise Inspections with Tipping-Off

This paper analyzes a model in which a firms compliance with regulation is monitored by a supervisor. The supervisor exerts costly, unobservable effort to raise his inspection intensity, which leads to moral hazard. A non-compliant firm may exert effort in avoidance to reduce the probability of sanction. The regulatory framework is such that inspections may be announced or unannounced. Our analysis derives novel results about the response of monitoring and avoidance to changes in inspection policies, as well as conditions under which a regulator who maximizes compliance prefers unannounced to announced inspections. When the supervisor is corruptible, unannounced inspections are susceptible to a tip-off from the supervisor to the firm in exchange for a bribe. To eliminate bribery, the regulator may reduce the frequency of inspections. However, in an example, we show that eliminating tipping-off may lead to lower compliance unless the supervisors wage is raised.

Pre‐Emptive Corruption, Hold‐Up and Repeated Interactions

This paper analyses repeated interactions between a firm and an inspector who monitors regulatory compliance. The firm may offer a bribe to pre-empt the inspection. Corruption is unfeasible in the one-shot game because of inspector hold-up. In an infinitely repeated game, we characterize the set of bribes that can be sustained as equilibrium paths using the trigger strategy. In this model, the most likely bribe-givers are not the firms that benefit the most from the illegal behaviour. Furthermore, strengthening anti-corruption policies has ambiguous welfare effects because it improves compliance only among a subset of firms, and increases monitoring effort.