UNIVERSITY INNOVATION AND THE PROFESSOR ' S PRIVILEGE Hans

National policies take varied approaches to encouraging university-based innovation. This paper studies a natural experiment: the end of the “professor’s privilege” in Norway, where university researchers previously enjoyed full rights to their innovations. Upon the reform, Norway moved toward the typical U.S. model, where the university holds majority rights. Using comprehensive data on Norwegian workers, firms, and patents, we find a 50% decline in both entrepreneurship and patenting rates by university researchers after the reform. Quality measures for university start-ups and patents also decline. Applications to literatures on university technology transfer, innovation incentives, and taxes and entrepreneurship are considered. Hans K. Hvide Solvberget 12 5038 Bergen Norway [email protected] Benjamin F. Jones Northwestern University Kellogg School of Management Department of Management and Strategy 2001 Sheridan Road Evanston, IL 60208 and NBER [email protected]