Aghion, PhilippeDewatripont, MathiasStein, Jeremy2010-02-122008Aghion, Philippe, Mathias Dewatripont, and Jeremy C. Stein. 2008. Academic freedom, private-sector focus, and the process of innovation. The RAND Journal of Economics 39, no. 3: 617-635.0741-6261http://nrs.harvard.edu/urn-3:HUL.InstRepos:3637074We develop a model that clarifies the respective advantages and disadvantages of academic and private-sector research. Rather than relying on lack of appropriability or spillovers to generate a rationale for academic research, we emphasize control-rights considerations, and argue that the fundamental tradeoff between academia and the private sector is one of creative control versus focus. By serving as a precommitment mechanism that allows scientists to freely pursue their own interests, academia can be indispensable for early-stage research. At the same time, the private sector's ability to direct scientists toward higher-payoff activities makes it more attractive for later-stage research.en-USJournal Article10.1111/j.1756-2171.2008.00031.x