Working Papers



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Upstream, Downstream: Diffusion and Impact of the Universal Product Code (with Emek Basker)

This paper matches archival data from the Uniform Code Council to establishments in the Longitudinal Business Database and Economic Census to study the diffusion and impacts of the Universal Product Code (UPC). We find evidence of network effects in the diffusion process. Matched-sample difference-in-difference estimates show that employment and trademark registrations increase following UPC adoption by manufacturers or wholesalers. Industry-level imports also increase with domestic UPC adoption. Our findings suggest that barcodes, scanning and related technologies helped stimulate variety-enhancing product innovation and encourage the growth of international retail supply chains.

Patent Examiner Specialization (with Cesare Righi)

We study the matching of patent applications to examiners at the U.S. Patent and Trademark Office. Using test statistics originally developed to identify industry agglomeration, we find strong evidence that examiners specialize in particular technologies, even within relatively homogeneous art units. Examiner specialization is more pronounced in the biotechnology and chemistry fields, and less in computers and software. Evidence of specialization becomes weaker, but does not completely disappear, if we condition on technology sub-classes. There is no evidence that certain examiners specialize in applications that have greater importance or broader claims. More specialized examiners have a lower grant rate and produce a larger narrowing of claim-scope during the examination process. We discuss implications for instrumental variables based on examiner characteristics.

Disclosure Rules and Declared Essential Patents (with R. Bekkers, C. Catalini, A. Martinelli and C. Righi)

Many standard setting organizations (SSOs) require participants to disclose patents that might be infringed by implementing a proposed standard, and commit to license their essential patents on terms that are at least fair, reasonable and non-discriminatory (FRAND). Data from these SSO intellectual property disclosures have been used in academic studies to provide a window into the standard setting process, and in legal proceedings to assess parties’ relative contributions to a standard. We develop a simple model of the disclosure process to illustrate the link between SSO rules and patent-holder incentives, and examine some of the model’s predictions using a novel dataset constructed from the disclosure archives of thirteen major SSOs. The central message of the paper is that subtle differences in the rules used by different SSOs can influence which patents are disclosed, the terms of licensing commitments, and ultimately long-run citation and litigation rates for the underlying patents.

Forking, Fragmentation and Splintering (with Jeremy Watson)

Although economic theory suggests that markets may tip towards a dominant platform or standard, there are many prominent examples of persistent incompatibility, inter-platform competition and standards proliferation. This paper examines the phenomena of forking, fragmentation and splintering in markets with network effects. We illustrate several causes of mis-coordination, as well as the tools that firms and industries use to fight it, through short cases of standardization in railroad gauges, modems, operating systems, instant messaging and Internet browsers. We conclude by discussing managerial implications and the potential welfare effects of efforts to promote inter-operability.

Differentiation in Adoption of Environmental Standards: LEED from 2000-2010 (with Marc Rysman and Yanfei Wang)

Understanding how firms adopt voluntary quality or environmental standards is important for designing such programs and evaluating their success. We study the adoption of LEED (Leadership in Energy & Environmental Design), an internationally recognized environmental building certification system. LEED offers four levels of certification, corresponding to greater investments in green building technology. We find substantial heterogeneity in the choice of certification levels, even within relatively small markets. In order to explain this heterogeneity, we specify a model that encompasses market and building factors, as well as differentiation - choosing LEED levels that distinguish a building from its rivals. We estimate this model via indirect inference, and find that differentiation accounts for 34.1% of the variation due to observable variables. It is more important than observed project characteristics, almost as important as observed market characteristics, and 16.07% as important as unobserved market effects. We also use the model to evaluate a counterfactual LEED standard that provides only two certification levels, reducing opportunities for differentiation. Our model predicts that certification levels would increase under the counterfactual standard, though this does not necessarily improve environmental performance.

Tax Credits and Small Firm R&D Spending (with Ajay Agrawal and Carlos Rosell)

We use a change in Canadian tax law to examine how small private firms respond to the R&D tax credit. Our estimates imply an R&D user-cost elasticity above unity. Contract R&D expenditures are more elastic than the R&D wage bill. Firms that perform contract research or recently invested in R&D capital are more responsive to a change in the after-tax cost of R&D. We interpret the latter findings as evidence of adjustment costs.


Older Projects

Disease Management: Helping Patients (Who Don’t) Help Themselves (with Paul Gertler)

Chronically ill patients currently consume a significant share of the U.S. health system's resources and are a rapidly growing segment of the overall population. Disease Management (DM) programs identify high-risk patients among the chronically ill, encourage them to take better care of themselves, and help coordinate the care they receive from various providers. This paper examines the impact of a diabetes Disease Management program. We find that it led to increased compliance with clinical practice guidelines, improvements in patient health, and significant reductions in the total cost of care. The financial benefits are greater for patients lacking “self control” prior to enrolment, as indicated by their failure to comply with generally accepted clinical practice guidelines. These results are especially important for the Medicare program, which has the majority of the chronically ill as beneficiaries.


Alternative Versions and Other Writing

Can standard setting organizations address patent hold­up? Comments for the Federal Trade Commission

This essay describes the problem of patent hold-up that can arise when firms own patents that are essential to an industry stadnard and fail to negotiate an ex ante license with implementers. I discusses a number of steps that standards setting organizations and government regulators might take to alleviate this problem.

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