TY - JOUR AU - Popp,David AU - Santen,Nidhi AU - Fisher-Vanden,Karen AU - Webster,Mort TI - Technology Variation vs. R&D Uncertainty: What Matters Most for Energy Patent Success? JF - National Bureau of Economic Research Working Paper Series VL - No. 17792 PY - 2012 Y2 - January 2012 UR - http://www.nber.org/papers/w17792 L1 - http://www.nber.org/papers/w17792.pdf N1 - Author contact info: David Popp Department of Public Administration and International Affairs Syracuse University The Maxwell School 426 Eggers Hall Syracuse, NY 13244-1020 Tel: 315/443-2482 Fax: 315/443-1081 E-Mail: dcpopp@maxwell.syr.edu Nidhi Santen Engineering Systems Division Massachusetts Institute of Technology E19-411-ST20 77 Massachusetts Avenue Cambridge, MA 02139 E-Mail: nrsanten@mit.edu Karen Fisher-Vanden Department of Agric. Economics and Rural Soc. 112-E Armsby Building Pennsylvania State University University Park, PA 16802 E-Mail: fishervanden@psu.edu Mort Webster Engineering Systems Division Massachusetts Institute of Technology E40-235 77 Massachusetts Avenue Cambridge, MA 02139 E-Mail: mort@mit.edu AB - R&D is an uncertain activity with highly skewed outcomes. Nonetheless, most recent empirical studies and modeling estimates of the potential of technological change focus on the average returns to research and development (R&D) for a composite technology and contain little or no information about the distribution of returns to R&D—which could be important for capturing the range of costs associated with climate change mitigation policies—by individual technologies. Through an empirical study of patent citation data, this paper adds to the literature on returns to energy R&D by focusing on the behavior of the most successful innovations for six energy technologies, allowing us to determine whether uncertainty or differences in technologies matter most for success. We highlight two key results. First, we compare the results from an aggregate analysis of six energy technologies to technology-by-technology results. Our results show that existing work that assumes diminishing returns but assumes one generic technology is too simplistic and misses important differences between more successful and less successful technologies. Second, we use quantile regression techniques to learn more about patents that have a high positive error term in our regressions – that is, patents that receive many more citations than predicted based on observable characteristics. We find that differences across technologies, rather than differences across quantiles within technologies, are more important. The value of successful technologies persists longer than those of less successful technologies, providing evidence that success is the culmination of several advances building upon one another, rather than resulting from one single breakthrough. Diminishing returns to research efforts appear most problematic during rapid increases of research investment, such as experienced by solar energy in the 1970s. ER -