Research summaries

Bronwyn H. Hall, University of California at Berkeley





During the past two years, the majority of Hallís research focused on issues in patent policy and the use of patents as indicators of technological innovation. A major data project undertaken jointly with Adam Jaffe of Brandeis University and Manuel Trajtenberg of Tel Aviv University was completed in 2001. One of the outputs of this project was the creation of large databases containing information on all U.S. patents granted during the past 35 years together with their citations, which have now been placed on the web for use by researchers everywhere. These data have already been used to improve methods of valuing intangible innovation assets at the firm level and to analyze the reasons for the rapid increase in semiconductor patenting during the recent past.

On the latter topic, Hall and Ziedonis (2001) find that the rise in patenting can be traced to a series of events related to the strengthening of patent protection in the United States during the nineteen-eighties, which has caused semiconductor manufacturing firms to amass hundreds and thousands of patents for cross-licensing and cross-litigation purposes. Because the typical semiconductor product brings together hundreds of pieces of intellectual property with different owners, these patents are needed as a defense against the possibility that the firms will be shut down by a preliminary injunction when they are sued by another patentholder. Both interview and empirical econometric evidence support this thesis, which can be used to argue that stronger patent rights may have some negative consequences in industries where systems and standards are important.

Another increasingly important topic in the knowledge-based economy is the administration and enforcement of intellectual property rights, especially patents. Together with Dietmar Harhoff of Ludwig-Maxmiliens University Munich and David Mowery of the University of California at Berkeley, Hall has embarked on a comparative study of the operations of the U.S. Patent Office and the European Patent Office by examining the experiences of patents on the same innovation taken out in the two different jurisdictions. Of particular interest in this study is the European opposition system, which may provide a lower cost model than litigation for determining the validity of a patent. The first results of this investigation are that valuable patents are more likely to be challenged in both jurisdictions, but that the rate of opposition at the EPO is more than thirty times higher than the rate of re-examination at the USPTO and that opposition is far more likely to lead to a revocation of the patent, implying that allowing third parties to participate does change the average outcome.

The results of Hallís research with Jacques Mairesse and Benoit Mulkay on R&D and investment in the U.S. and France were published in both French and English during 2001. Using a dynamic specification of a simple error-corrected investment model, this research compares the behavior of large French firms to large United States firms and physical investment to R&D investment, finding no significant differences between the two countries in the long run effects of demand (output) on investment. However, cash flow or profits appear to have a much larger impact on both R&D and investment in the U.S. than in France, suggesting either that U.S. firms are more responsive to profitability signals, or that they are more subject to liquidity constraints.

Hall also co-edited a special issue of the Oxford Review of Economic Policy with David Ulph of the University College London. This issue, published in January 2002, contains an introduction and a survey article on the financing of R&D written by Hall.
Presentations of this work have been made at conferences in Seattle, Washington (World Congress of the Econometric Society), Paris (International Conference on Technology Policy and Innovation), Washington, D.C. (National Academies of Science and Engineering, the Tax Policy Council, and an NSF Workshop), New Orleans (American Economic Association annual meeting), Brussels (European Commission), Stockholm, Munich (German Classification Society annual meeting), UC Berkeley, Reading, UK (MESIAS Workshop), Maastricht, the Netherlands (Workshop on Strategic Management, Innovation and Econometrics), and Cambridge, Massachusetts (National Bureau of Economic Research Summer Institute), as well as seminars at UC Berkeley, UCLA, University College London, University of York, Oxford University, and the Universidade Tecnica de Lisboa. In June 2001 and 2002 Hall lectured at the Scuola SantíAnna Superiore in Pisa as Omnitel Visiting Professor of Economics and TIM Visiting Professor of Economics.


Hallís research this year has focused on several current technology policy issues: firm response to changes in U.S. intellectual property protection, the analysis of public R&D support via subsidy and tax credits, and the functioning of university-industry partnerships.

Revisions of papers with Rosemarie Ham Ziedonis that studies the dramatic changes in patenting behavior in the semiconductor industry in the past 15 or so years and with Albert Link and John Scott on university-industry partnerships are underway. Both papers are partially survey and interview-based. Together with Link and  Scott, Hall has begun new work on the intellectual property barriers encountered by these partnerships; disagreements over the ownership of  IP are often the most serious problem encountered in setting up these research relationships.

Three papers on which she is co-author have been or will be published in Research Policy in Spring 2000: a survey written with John van Reenen on the effectiveness of R&D tax credits around the world; a survey with Paul David and Andrew Toole reviewing the literature on the relationship between public and private R&D spending; and an analytic paper with Paul David on the same topic.

In addition, Hall continues to work on firm-level investment and the valuation of intangibles. Together with Adam Jaffe and Manuel Trajtenberg, a revised working paper on the use of citation-weighted patent measures of the private value of innovations is being prepared for submission to publication. A paper with Daehwan Kim on the measurement of Tobinís q and the market value of R&D is also in progress, as is work on takeovers and R&D in U.S. firms.

Work with Jacques Mairesse and Benoit Mulkay on comparative investment behavior of French and U.S. firms also continues, with a new paper showing that when one compares firms across countries, across types of investment (ordinary plant and equipment versus R&D), and across type of firm (high or low technology, R&D-performing or not), the only significant difference that emerges is that the investment and R&D of U.S. firms are much more responsive to changes in the firms' cash flow or profits than French firms.

Presentations of this work have been made at conferences in Washington, D.C. (NAS), Berkeley, Boston (AEA meetings), Vienna (IIASA), Turin, Gotenberg, Sweden, Frankfurt (Deutsche Bundesbank), and Santiago de Compostella (ESEM), as well as seminars in Paris (INSEE-CREST) and Philadelphia (Wharton School). In July 1999 Hall joined the Science, Technology and Economic Policy Board of the National Academies of Science, Engineering, and Medicine.


During the past year, Hall continued joint work with Adam Jaffe and Manuel Trajtenberg on the use of citation-weighted patent measures of firm-level innovation value. Her survey of work relating innovation to market value was published in a Cambridge University Press volume. Work with Jacques Mairesse and Benoit Mulkay on R&D and investment modeling continued.

With Rose Marie Ham, a graduate student in the Haas School of Business, Hall embarked on a new research project that studies the dramatic changes in patenting behavior in the semiconductor industry in the past 15 or so years. Interviews with a small number of firms in this industry were combined with econometric evidence about their patenting success to paint a consistent picture explaining why the rate of patenting in the industry has more than doubled between 1985 and 1995. Primary reasons for the increase appear to be the increasing complexity of technology and hence the reliance on technology cross-licensing for production in this sector. This has led firms to amass a large numbers of patents in order to make favorable trades with others in the industry and to avoid production hold-ups due to litigation over intellectual property.

Hall also prepared two survey articles for a special issue of Research Policy, one with John van Reenen on the effectiveness of R&D tax credits around the world, and one with Paul David and Andrew Toole reviewing the literature on the relationship between public and private R&D spending. She and Paul David began a project that contributes to the debate on the effects of public R&D subsidies on private firm R&D with a paper setting out a framework for analysis presented at the American Economic Association meetings in New York.

During January to June of 1999 Hall continued as Temporary Professor of Economics at Nuffield College, Oxford University and Research Associate at the Institute of Fiscal Studies, London.

Seminars: University College London; UC Berkeley; Oxford Intellectual Property Seminar, St. Peterís College Oxford; Ludwig-Maximilians Universitšt, MŁnich; Faculty of Economics, University of Cambridge; Her Majestyís Treasury, London, UK; Wissenschaftszentrum Berlin; Institute for Fiscal Studies, London; Royal Institute of International Affairs, London.

Conference presentations: NBER (Summer Institute 1998; 20th Anniversary Productivity Program; Patent System and Innovation, Santa Barbara ); ASSA Meetings 1999 (New York); Mannheim, Germany; Herstmonceaux Castle, Sussex; Fondazione ENI, Milano; University of Warwick, Coventry; Computer Conference, San Diego.


1997-98 was a productive year for Professor Bronwyn Hall, owing in part to a month spent as an invited visitor at the Rockefeller Centre - Villa Serbelloni, Bellagio, Italy. She produced the first results from a project joint with Adam Jaffe of Brandeis University and Manuel Trajtenberg of Tel Aviv University that investigates the use of patent citation statistics to improve measures of the value of innovative assets at the firm level. Two working papers describe the initial results, one a detailed study of the market- value citation relationship and the second a survey of current research on the market value of innovations. Hall also continued joint work with Jacques Mairesse of INSEE-CREST, Paris. With fellow researchers Bruno Crepon of INSEE and Lee Branstetter of UC Davis, Hall prepared a paper that explores the causal relationship between cash flow and investment in three Western economies. Other research joint with Mairesse and Benoit Mulkay (Universite des Antilles et de la Guyane) explores and evaluates changes in firm-level panel data estimation of investment equations over the past twenty years.

Progress was made on two research projects for the U.S. Government. A Final Report was completed for a project for the National Science Foundation, joint with William Long of Business Performance Research Associates, that compares the two primary micro-level data sources for R&D spending in private industry. A new project, joint with Albert Link of UNC-Greensboro and John Scott of Dartmouth College, will evaluate the performance of university-industry joint ventures funded by the Advanced Technology Program at the National Institute of Standards and Technology.

The spring of 1998 also saw the publication of a combined special issue of Economics of Innovation and New Technology, edited by Hall and Francis Kramarz, that contains papers from a 1995 international conference on the effects of technology and innovation on firm performance, employment, and wages. The papers contained in this volume (which is spread over several issues of the journal) cover approximately 15 countries.

Seminar presentations were made at Keele University, PREST-U of Manchester, University of Reading, University of Paris I, and conference presentations  at CEMFI (Madrid), NIESR (London), Intellectual Property Institute (London), and New York University. Together with Alfonso Gambardella, she organized an international conference on "Economics of Science and Technology: Micro-Foundations and Policy," in Urbino, Italy, on June 5 and 6. During January to June of 1998 Hall was Temporary Professor of Economics at Nuffield College, Oxford University and Research Associate at the Institute of Fiscal Studies, London.


Bronwyn Hall continued the development of a major update of her database of United States manufacturing firms, combining financial data with data on patenting activities. Because firms file for patents under a variety of different names, this undertaking is a lengthy process requiring one to match the names of firms to their subsidiaries, and then  to those of patenting organizations. This portion of the project is multi-year and not yet completed.

The database has been used in several projects already, however: two projects described last year and the two working papers list below. The first is a comparative study of firm-level investment that focuses on methodological issues in the estimation of the demand for investment. Our preliminary results suggest an increased impact of cash flow on investment in the United States, when compared with twenty years ago. The second paper is a preliminary version of a study that will look more closely at the relationship between the merger wave of the 1980s and innovation with the benefit of hindsight, now that we have data through the mid-nineties.

Seminars on this research were presented at the University of Southampton and the ESRC/NIESR Research Seminar Group on Productivity and Competitiveness, London, June 1997. Invited papers were presented at the Seventh International Conference on Panel Data, La Sorbonne, Paris and the NBER Conference on Mergers and Productivity, Cheeca Lodge, Islamorada, Florida. During January to June of 1997 Hall was Temporary Professor of Economics at Nuffield College, Oxford University and Research Associate at the Institute of Fiscal Studies, London. She was also a visiting scholar at the  Federal Reserve Board of Governors in October 1996.


During the 1995-1996 academic year, Bronwyn Hall continued her research into the measurement of the returns to R&D at the firm level in the United States, revising a survey for publication in an AEI/Brookings volume and beginning a new project that explores the role of market share and other indicators of firm size and market power on innovation (Hall and Vopel). She also studied the role of financial factors in the R&D and capital investment decisions using micro-econometric methodology, focusing on the role of working capital (in a paper with Hugo Kruiniker of the Rijksuniversiteit Limburg) and on international comparisons between the United States, France, and Japan.

Hall was a Visiting Professor at the New Economic School, Moscow, Russia in March and April, Economics visitor at Nuffield College, Oxford in May, and Visiting researcher at CREST, INSEE, Paris in June.

Last updated 3 August 2006 by Bronwyn H. Hall