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| Author: | Beath, J. (et al.) |
| Title: | Optimal incentives for income-generation in universities: the rule of thumb for the Compton tax |
| Journal: | International Journal of Industrial Organization
2003 : NOV, VOL. 21:9, p. 1301-1322 |
| Index terms: | Universities Research Finance Incomes |
| Language: | eng |
| Abstract: | This paper proposes a novel framework to model one of the key links btw. universities and industry, the undertaking of applied research. It is postulated that a basic objective of universities is to undertake fundamental research and that they receive public funding to do so. Faced with tight budget constraints, universities may have incentives allowing their staff to devote some of their time to income-generating activities such as applied research or consultancy. This opens up two channels by which universities can ease their budget constraint: by allowing academics to supplement their income, universities may be able to hold down academic salaries. Universities can effectively 'tax' the income that academics raise through applied research or consultancy e.g. through the imposition of 'overhead charges'. The Compton tax, used at MIT (Massachusetts Institute of Technology, U.S.) in the 1930s, is an early example of the use of the instrument. |
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