How Do Patent Laws Influence Innovation? Evidence from Nineteenth-Century World's Fairs

Abstract

Studies of innovation have focused on the effects of patent laws on the number of innovations, but have ignored effects on the direction of technological change. This paper introduces a new dataset of close to fifteen thousand innovations at the Crystal Palace World's Fair in 1851 and at the Centennial Exhibition in 1876 to examine the effects of patent laws on the direction of innovation. The paper tests the following argument: if innovative activity is motivated by expected profits, and if the effectiveness of patent protection varies across industries, then innovation in countries without patent laws should focus on industries where alternative mechanisms to protect intellectual property are effective. Analyses of exhibition data for 12 countries in 1851 and 10 countries in 1876 indicate that inventors in countries without patent laws focused on a small set of industries where patents were less important, while innovation in countries with patent laws appears to be much more diversified. These findings suggest that patents help to determine the direction of technical change and that the adoption of patent laws in countries without such laws may alter existing patterns of comparative advantage across countries.

Inducement Prizes and Innovation

“…We find that around a fifth of the 15,032 entrant inventions were patented, which corresponds closely to the proportion of "mechanical" technologies patented at the Crystal Palace Exhibition in 1851 (Moser, 2005).…”

The long-run impact of human capital on innovation and economic development in the regions of Europe

“…One standard way is to take the number of patent applications or grants (e.g., Acs, Anselin, and Varga 2002;Pellier 2009, 2012). In addition to patent applications, other variables that are used to measure innovation include investments in R&D (e.g., Cohen and Levinthal 1989), changes in productivity (David 1990;Von Tunzelmann 2000), bibliometrics (Andersen 2001) and data on (international) expositions and fairs (Moser 2005). Patent statistics have certain setbacks; for example, organisational changes or know-how cannot be patented and not all patented products become innovations (Griliches 1990).…”

The Causal History of Africa: A Response to Hopkins

“…For example, Naidu (2009) uses only variation in state-level poll taxes and literacy tests within pairs of border-adjacent counties to identify the impact of voting restrictions on black political participation, schooling outcomes, and land values in the post-bellum US south. Moser (2005), similarly, constructs synthetic matches in her study of the impact of national patent laws on innovations recorded in nineteenth century worlds fairs.…”