Research shows that patent examiners are more likely to grant patents to companies they later work for

In their National Bureau of Economic Research working paper From Revolving Doors to Regulatory Capture? Evidence from Patent Examiners (Sci-Hub Mirror), Business School profs Haris Tabakovic (Harvard) and Thomas Wollmann (Chicago) show that patent examiners are more likely to grant patents for companies that they subequently go to work for; they also go easier on patents applied for by companies associated with their alma maters (where they have more connections and will find it easier to get a job after their turn in government service).

We begin by showing that revolving door examiners grant 12.6-17.6% (8.5-11.9 percentage points) more patents to firms that later hire them. This result is robust to varying the level of controls, e.g. the inclusion or exclusion of examiner and firm fixed effects, or limiting the sample to only firms that hire at least one examiner, which cuts the sample by roughly two-thirds. While the “headline” number alone is not proof of capture, the robustness does suggest that unobservable differences—at least along the aforementioned dimensions—are very small.

We next ask whether revolving door examiners extend this leniency to prospective employers as well. Here we rely on two premises: first, that examiners face uncertainty about which firms will have future job openings and, second, that conditional on the type of work, an employer’s location is the most important attribute on which workers base their choices [Barber and Roehling, 1993, Turban, Eyring, and Campion, 1993, Powell and Goulet, 1996]. Thus, we test whether they grant more patents to other firms in close proximity to the firm that hired them (after excluding any observations where the filing firm later hired the examiner). We find that examiners extend much of the leniency afforded to their future employers to other firms that are nearby, and that these results are robust to varying the granularity of the controls and restricting the sample to only firms or cities that hire at least one examiner. To be indicative of regulatory capture, this approach requires only that examiners’ match-specific preference shocks are independent across locations, rather than across firms. Hence it provides somewhat stronger evidence.

From Revolving Doors to Regulatory Capture? Evidence from Patent Examiners [Haris Tabakovic and Thomas Wollmann/NBER] (Sci-Hub Mirror)

Revolving doors and regulatory capture [Haris Tabakovic and Thomas Wollmann/CEPR]

(via Marginal Revolution)

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