Interstate Cigarette Bootlegging: Extent, Revenue Losses, and Effects of Government Intervention

In this paper, we develop and estimate a model of commercial smuggling in which some, but not all, firms smuggle a portion of the cigarettes they sell. The model is used to examine the effects on interstate cigarette smuggling of the Contraband Cigarette Act and a change in the federal excise tax. We find that both policies have unintentional effects. While the Contraband Cigarette Act was imposed to reduce interstate smuggling, we find it had the opposite effect. In contrast, an increase in the federal tax is not intended to affect smuggling, but we find it increases the portion of cigarette sales that is commercially smuggled.

Who is Selling the Ivory Tower? Sources of Growth in University Licensing

Historically, commercial use of university research has been viewed in terms of spillovers. Recently, there has been a dramatic increase in technology transfer through licensing as universities attempt to appropriate the returns from faculty research. This change has prompted concerns regarding the source of this growth - specifically, whether it suggests a change in the nature of university research. We develop an intermediate input model to examine the extent to which the growth in licensing is due to the productivity observable inputs or driven by a change in the propensity of faculty and administrators to engage in commercializing university research. We model licensing as a three stage process, each involving multiple inputs. Nonparametric programming techniques are applied to survey data from 65 universities to calculate total factor productivity (TFP) growth in each state. To examine the sources of TFP growth, the productivity analysis is augmented by survey evidence from business who license-in university inventions. Results suggest that increased licensing is due primarily to an increased willingness of faculty and administrators to license and increased business reliance on external R&D rather than a shift in faculty research.

Are Faculty Critical? Their Role in University-Industry Licensing

Understanding the nature of the involvement of faculty in university licensing is im-portant for understanding how technology is transferred through licensing as well as more controversial issues, such as the need for university licensing. Using data from a survey of firms that actively license-in from universities we explore the importance of faculty in the licensing and development of inventions, as well as how and why they are used and how the use of faculty relates to characteristics of firms. In particular we find that the use of faculty through sponsored research in lieu of a license is closely related to the amount of basic research conducted by firms whereas the use of faculty within the terms of a license is related to the prevalence of personal contacts between industry R&D researchers and university faculty.

The Disclosure and Licensing of University Inventions

We examine the interplay of the three major university actors in technology transfer from universities to industry: the faculty, the technology transfer office (TTO), and the central administration. We model the faculty as an agent of the administration, and the TTO as an agent of both the faculty and the administration. Empirical tests of the theory are based on evidence from our survey of 62 US research universities. We find that the TTOs reported licensing objectives are influenced by their views of faculty and administration, which supports the assumption that the TTO is a dual agent. The theory yields predictions for whether or not faculty disclose inventions and if so, at what stage, which in turn affects license contract terms. We also examine how the portion of inventions disclosed at different stages varies with faculty quality. Quality is found to be inversely related to the share of license income allotted to faculty.

Elasticities in International Trade: Theoretical and Methodological Issues

This paper is a survey of recent research on specification, estimation and evaluation of trade elasticities. Since our focus is primarily methodological we do not give a compendium of recent estimates. Given the excellent and comprehensive nature of previous surveys, the marginal benefit of doing so would be small. In addition, we shall argue that any hope of obtaining a consensus of parameter values from trade equations must rely on taking a different approach. The approach involves using (and allowing the reader to use) as much information as is practically possible. There are both theoretical and econometric reasons to pursue such an approach, and we shall focus on studies which clarify them.Research Seminar in International Economics, Department of Economics, University of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/101016/1/ECON455.pd

Bilateral Trade Flows, The Linder Hypothesis, and Exchange Risk

Bilateral trade flows are used to examine the Linder hypothesis and the effect of exchange-rate variability in a gra vity-type trade model derived from an underlying demand and supply mo del. A behavioral model is used to justify examining these issues joi ntly. The model performs well empirically using a sample of seventeen countries for the period 1974-82. The authors find overwhelming supp ort for the Linder hypothesis and this version of the gravity model. Moreover, they find strong support for the hypothesis that increased exchange-rate variability affects bilateral trade flows.Research Seminar in International Economics, Department of Economics, University of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/101017/1/ECON456.pd

Strategic Models, Market Structure, and State Trading: An Application to Agriculture

The purpose of this paper is to examine the strategic use of trade policy when homogeneous products are competitively produced, but their marketing is imperfectly competitive. This type of imperfect competition occurs in agricultural markets when stats trading agencies or marketing boards are the sole marketing agents for products. It has also been hypothesized to occur in private trade of some agricultural products, but the extent of the market power of private traders is a highly controversial issue. Since the large USSR purchases of grain in the mid-1970s, the competitiveness of the US grain exporting industry has been highly disputed.Research Seminar in International Economics, Department of Economics, University of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/101018/1/ECON457.pd

Patent Licensing and the Research University

We construct a dynamic model of university research that allows us to examine recent concerns that financial incentives associated with university patent licensing are detrimental to the traditional mission of US research universities. We assume a principal-agent framework in which the university administration is the principal and a faculty researcher is the agent. Whether or not the researcher remains in the university, and if so her choice of the amount of time to spend on basic and applied research, is complicated by the fact that she earns license income and prestige both inside and outside the university. Thus in contrast to usual principal agent models the participation constraint is endogenous. This, plus the fact that current research affects future knowledge stocks, allows us to show that it is far from obvious that licensing will damage basic research and education.

Can Subsidies for MARs be Procompetitive?

In contrast to recent literature, we show that market access requirements (MARs) can be implemented in a procompetitive manner even in the absence of threats in related markets. By focusing on subsidies that are paid only when the requirement is met, we show that a MAR can increase aggregate output relative to free trade provided that the right set of firms is targeted. In the context of a model with multiple Japanese and US firms, we show that a MAR on US imports is procompetitive as long as the US firms are the ones targeted to receive the subsidy.

Inventor Moral Hazard in University Licensing: The Role of Contracts

We examine commonly observed forms of payment, such as milestones, royalties, or consulting contracts as ways of engaging inventors in the development of licensed inventions. Our theoretical model shows that when milestones are feasible, royalties are not optimal unless the licensing firm is risk averse. The model also predicts the use of consulting contracts which improve the firm's ability to monitor inventor effort. Because these contracts increase the firm's expected profits, the upfront fee that the university can charge is higher than otherwise. These results therefore support the commonly observed university policy of allowing faculty to consult with licensing firms outside of their university contracts. They also support firm policies of including milestones. An empirical analysis based on a survey of 112 businesses that license-in university inventions supports the complementarity of milestones and consulting suggested by the theory.