TY - JOUR AU - Murray,Fiona AU - Aghion,Philippe AU - Dewatripont,Mathias AU - Kolev,Julian AU - Stern,Scott TI - Of Mice and Academics: Examining the Effect of Openness on Innovation JF - National Bureau of Economic Research Working Paper Series VL - No. 14819 PY - 2009 Y2 - March 2009 UR - http://www.nber.org/papers/w14819 L1 - http://www.nber.org/papers/w14819.pdf N1 - Author contact info: Fiona Murray MIT Sloan School of Management 100 Main Street, E62-470 Cambridge, MA 02142 Tel: 617/253-3681 Fax: 617/253-2660 E-Mail: fmurray@mit.edu Philippe Aghion Department of Economics Harvard University 1805 Cambridge St Cambridge, MA 02138 Tel: 617/495-6675 Fax: 617/495-4341 E-Mail: paghion@fas.harvard.edu Mathias Dewatripont Universite Libre de Bruxelles E-Mail: mathias.dewatripont@ulb.ac.be Julian Kolev Department of Economics Harvard University 1805 Cambridge St Cambridge, MA 02138 E-Mail: kolev@fas.harvard.edu Scott Stern MIT Sloan School of Management 100 Main Street, E62-476 Cambridge, MA 02142 Tel: 617/253-3053 Fax: 617/253-2660 E-Mail: sstern@mit.edu AB - Scientific freedom and openness are hallmarks of academia: relative to their counterparts in industry, academics maintain discretion over their research agenda and allow others to build on their discoveries. This paper examines the relationship between openness and freedom, building on recent models emphasizing that, from an economic perspective, freedom is the granting of control rights to researchers. Within this framework, openness of upstream research does not simply encourage higher levels of downstream exploitation. It also raises the incentives for additional upstream research by encouraging the establishment of entirely new research directions. In other words, within academia, restrictions on scientific openness (such as those created by formal intellectual property (IP)) may limit the diversity and experimentation of basic research itself. We test this hypothesis by examining a "natural experiment" in openness within the academic community: NIH agreements during the late 1990s that circumscribed IP restrictions for academics regarding certain genetically engineered mice. Using a sample of engineered mice that are linked to specific scientific papers (some affected by the NIH agreements and some not), we implement a differences-in-differences estimator to evaluate how the level and type of follow-on research using these mice changes after the NIH-induced increase in openness. We find a significant increase in the level of follow-on research. Moreover, this increase is driven by a substantial increase in the rate of exploration of more diverse research paths. Overall, our findings highlight a neglected cost of IP: reductions in the diversity of experimentation that follows from a single idea. ER -