NBER Working Papers by Timothy Simcoe

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Working Papers

October 2014Do Tax Credits Affect R&D Expenditures by Small Firms? Evidence from Canada
with Ajay Agrawal, Carlos Rosell: w20615
We exploit a change in eligibility rules for the Canadian Scientific Research and Experimental Development (SRED) tax credit to gain insight on how tax credits impact small-firm R&D expenditures. After a 2004 program change, privately owned firms that became eligible for a 35 percent tax credit (up from a 20 percent rate) on a greater amount of qualifying R&D expenditures increased their R&D spending by an average of 15 percent. Using policy-induced variation in tax rates and R&D tax credits, we estimate the after-tax cost elasticity of R&D to be roughly -1.5. We also show that the response to changes in the after-tax cost of R&D is larger for contract R&D expenditures than for the R&D wage bill and is larger for firms that (a) perform contract R&D services or (b) recently made R&D-related...
September 2012Public Procurement and the Private Supply of Green Buildings
with Michael W. Toffel: w18385
We measure the impact of municipal policies requiring governments to construct green buildings on private-sector adoption of the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) standard. Using matching methods, panel data, and instrumental variables, we find that government procurement rules produce spillover effects that stimulate both private-sector adoption of the LEED standard and supplier investments in green building expertise. Our findings suggest that government procurement policies can accelerate the diffusion of new environmental standards that require coordinated complementary investments by various types of private adopter.

Published: T. Simcoe and M. To el. Government Green Procurement Spillovers: Evidence from Municipal Building Policies in California. Journal of Environmental Economics and Management, 68(3):411{434. Lead article. (November 2014).

May 2010CEO Overconfidence and Innovation
with Alberto Galasso: w16041
Are CEOs' attitudes and beliefs linked to their fims' innovative performance? This paper uses Malmendier and Tate's measure of overconfidence, based on CEO stock-option exercise, to study the relationship between a CEO's "revealed beliefs" about future performance and standard measures of corporate innovation. We begin by developing a career concern model where CEOs innovate to provide evidence of their ability. The model predicts that overconfident CEOs, who underestimate the probability of failure, are more likely to pursue innovation, and that this effect is larger in more competitive industries. We test these predictions on a panel of large publicly traded firms for the years 1980 to 1994. We find a robust positive association between overconfidence and citation-weighted patent counts ...

Published: CEO Overconfidence and Innovation (paper + online appendix); with Tim Simcoe; Management Science; Issue: 57; 2011; Pages: 1469-1484.

November 2007Competing on Standards? Entrepreneurship, Intellectual Property and the Platform Paradox
with Stuart J.H. Graham, Maryann Feldman: w13632
This paper studies the intellectual property strategy of firms that participate in the formal standards process. Specifically, we examine litigation rates in a sample of patents disclosed to thirteen voluntary Standard Setting Organizations (SSOs). We find that SSO patents have a relatively high litigation rate, and that SSO patents assigned to small firms are litigated more often than those of large publicly-traded firms. We also estimate a series of difference-in-differences models and find that small-firm litigation rates increase following a patent's disclosure to an SSO while those of large firms remain unchanged or decline. We interpret this result as evidence of a "platform paradox" -- while small entrepreneurial firms rely on open standards to lower the fixed cost of innovation, th...

Published: Competing on Standards? Entrepreneurship, Intellectual Property and Platform Technologies, Timothy S. Simcoe, Stuart J.H. Graham, Maryann P. Feldman. in Entrepreneurship: Strategy and Structure, Hellmann and Stern. 2009

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