Research Universities: Producers of Economic Development or Luxury Goods? ASHE 1985 Annual Meeting Paper.

Research that occurs in universities under conditions of patronage is distinguished from research that occurs under less distorted market conditions. It is claimed that academic research is shifting from an area of patronage consumption to one of economic development investment. In addition to considering the markets for academic research and research and development funding under conditions of patronage, implications for economic development policy are considered. Markets for research in universities under conditions of patronage have special features: patronage commonly occurs under conditions of oligopsony, where research is sponsored by a relatively small number of federal agencies, the largest foundations, and top industrial supporters; patronage implies unequal bargaining power; the patron gains indirect consumption benefits, some of which are based on exclusion; and consumption as opposed to investment is a key element of patronage. Some universities wish to decrease their dependence on federal support and are attempting to broaden their revenue base by a move toward state or regional economic development. The life sciences are used as an example of the problem of "misspecialization" of research that can create "blockages" as it flows into the economy, generating low economic growth. (SW)