The Breakup of Bell and its Impact on Innovation

In 1984, the Bell System was broken up after a a seven-year legal battle. Bell was accused of having used its position as a regulated monopolistic provider of local telephone services to erect anticompetitive barriers to entry in the potentially competitive markets for telecommunications equipment and for long-distance telephone services. In this paper, we show that this breakup had a substantial positive long-term impact on US innovation. By distinguishing different technology fields, we demonstrate that the structural separation of the Baby Bells stimulated innovation over and above what previous regulatory interventions aiming at fostering competition in the equipment and the long-distance market had achieved.

Project status in progress
Project time since 01.02.2021
Keywords Innovation; Antitrust; Structural remedies
 

Standing on the shoulders of science

The goal of science is to advance knowledge, yet little is known about its value for marketplace inventions. Analyzing U.S. patents, we establish three new facts about the relationship between science and the value of inventions. First, we show that a patent directly building on science is on average 2.9 million U.S. dollars more valuable than a patent in the same technology but unrelated to science. Based on the analysis of the patent text, we show second that the novelty of patents predicts their value, and third that scienceintensive patents are more novel. This documents that science introduces new concepts that are valuable for marketplace inventions. Our study informs the debate on the merits of science for corporate innovation and the origins of breakthrough inventions.

Project status in progress
Project time since 01.02.2021
Keywords Corporate Innovation; Science