Patents, Papers, Pairs & Secrets: Contracting over the disclosure of scientific knowledge

Motivated by the central role of voluntary knowledge disclosure in ensuring cumulative progress, this paper evaluates the conditions supporting the disclosure of privately funded new knowledge through scientific publication, patenting, or both. We ground our analysis in the incentives facing researchers and their funders: scientists have incentives to disclose discoveries through scientific publication, while firms have incentives to protect their ideas through patenting or secrecy. When negotiating their compensation, researchers and firms bargain over whether (and how) knowledge will be disclosed. We evaluate four different disclosure regimes: secrecy, commercial science (where the only disclosures result from patenting), open science (where the only disclosures occur through scientific publication) and patent-paper pairs (where the firm discloses along both dimensions). Our model derives conditions under which each of these outcomes emerges as the result of the strategic interaction between researchers and research funders, and offers a number of novel insights into the determinants of the disclosure strategy of a firm. Among other findings, our analysis highlights the subtle interdependency between patenting and publication: for example, as the knowledge required for patenting and publication converge, we will observe either secrecy or patent-paper pairs, to the exclusion of uni-dimensional disclosures (i.e., Commercial Science or Open Science). Journal of Economic Literature Classification Number: O34.