Direct and Spillover Effects of ATP-Funded Photonics Technologies

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To investigate explicitly both market spillovers and knowledge spillovers through casestudies, a methodological extension we implement is a combination of a snowballinterviewing process, in which we identify key customers, suppliers, and competitors andinclude them in our interviewing in order to measure market spillovers, and patent andpublication citation analyses to identify organizations outside the initial target markets inorder to investigate knowledge spillovers. We are thereby mapping the technology diffusionprocess by including nonparticipating customers, competitors, suppliers, and otherorganizations in the study.The third methodological contribution is framed in our question:Question 7: How might methodologies for estimating the value of displaced technologiesbe improved?This relates to accounting for the economic value of technologies displaced from the marketby technologies emerging from ATP-supported development projects. In theory, theincremental economic value attributable to a new technology (and, by extension, to thepolicies that supported its development) should net out the economic value that would haveexisted had the new technology not been created. This is either (or both) a forecasting orhistorical counterfactual exercise, subject to large uncertainties and subjectivity.In empirical practice, this has meant subtracting the forecast value of the displaced “defendertechnologies” already in the market. Note, however, that this counterfactual compared-towhatvaluation of a new technology takes a static view of the “old” market. It essentiallyignores the potential value of parallel development projects that may have occurred elsewherein the market, the results of which were not yet in the market. However, paralleldevelopment projects among competitors in markets characterized by dynamic strategicinteractions and rapidly moving technologies are possible, and even likely. When a newtechnology enters a market, it might not only displace the existing defender in the market butalso preempt a second, third, or more also-rans that would have otherwise emerged. We callthis process “dynamic displacement” and believe it is a theoretically superior construct to theforecast of a single defender technology and, in the context of counterfactual estimation, nomore subject to error empirically.Where counterfactual analysis is called for, we utilize a dynamic interpretation of thedefender technology for estimating the economic value displaced by a new technology,comparing both a static and dynamic defender interpretation in order to evaluate thedifference between the two approaches in terms of their estimates of net social value, as wellas their empirical feasibility.OVERVIEW OF PHOTONICS INDUSTRIESThis study focuses on evaluating ATP projects in the photonics industries. Photonics involvesthe joint application of optics and electronics (i.e., generating, controlling, manipulating,applying, and detecting photons and electrons). ATP supports technology development in this6 DIRECT AND SPILLOVER EFFECTS OF ATP-FUNDED PHOTONICS TECHNOLOGIES
area because many photonics technologies are in an emerging stage characterized by highrisk, are seen as enabling technologies for many industrial sectors, and are based on such abroad interdisciplinary science platform. Development of photonics technologies has thepotential to lead to significant spillover and market opportunities.At the intersection of optics and electronics, photonics often draws on and informs multiplescience and technology disciplines, including:• optical physics and chemistry• materials science, materials processing, and thin films• integrated optics, micro-optics, and adaptive optics• information processing, holography, optical storage, and pattern recognition• quantum electronics, semiconductors, and lasersMoreover, fields across this base are progressing rapidly. Our ability to control photons hassurpassed our ability to control electrons. We can control not only light’s energy better, butalso its wavelength and its temporal dimensions. For example, scientists have made pulses oflight that are femtoseconds (10–15) long, a millionth of a billionth of a second.Today, photonics plays a key enabling role in applied technologies such astelecommunications, information storage, imaging, and signal processing. The invention oflasers, semiconductor materials, optical fibers, and other waveguides and discoveries inphotonics materials and of nonlinear optical phenomena have enabled the development ofmany new optical systems and devices with far-reaching impact on our everyday lives (seeTable 1).This study of photonics and optoelectronics adds to the set of field-focused ATP evaluations.The vast diversity in technologies, market structures, relative U.S. competitive positions,methods for appropriating value from technology development, degrees of collaboration,spillover mechanisms, and so on almost certainly mean that ATP’s impact will vary widelyacross sectors. Sector diversity in evaluation studies should lead to a better understanding ofspillover mechanisms and the relative importance of various market and technologicalfactors. Such increased insight, in turn, may improve program design and project selectionnot only for ATP, but also for other science and technology funding programs.Few studies of this increasingly important industry have been conducted. According to theOptoelectronics Industry Development Association, total revenues for photonics componentsworldwide were more than $73 billion in 2000 (see Figure 2). Photonics is rapidly becomingone of the largest high-technology sectors. It is already roughly half as large worldwide assemiconductors or aircraft and growing more rapidly (see Table 2). Curiously, despite theimportance of photonics in absolute terms, and the central role it plays in enabling other keysectors, very few academic studies exist. Using a simple metric, shown in Table 2, a keywordsearch on abstracts in the academic literature database EconLit turned up hundreds of studieson semiconductors, aircraft, and pharmaceuticals, but only a handful on either photonics (2abstracts) or optoelectronics (8 abstracts). Even “optics” generated very few (15), and severalIntroduction and Background 7
Page 1 and 2: NIST GCR 06-893Direct and Spillover
Page 5 and 6: AbstractTo evaluate the impact of t
Page 7: AcknowledgmentsThis research would
Page 10 and 11: This report presents the findings f
Page 12 and 13: 6. This case study suggests that ke
Page 14 and 15: 3. Comparison of Displaytech and Un
Page 17 and 18: 1. Introduction and BackgroundThe A
Page 19 and 20: the Department of Defense (DOD), Na
Page 21: Hence, we consider two additional s
Page 25 and 26: FIGURE 2Worldwide Photonics Compone
Page 27 and 28: TABLE 3.Matched Case Study Firms by
Page 29 and 30: 2. DisplaytechINTRODUCTIONIn June 1
Page 31 and 32: significant interest worldwide. The
Page 33 and 34: FIGURE 3Cross-Section of a Ferroele
Page 35 and 36: TABLE 4.Crowded Display Competition
Page 37 and 38: FIGURE 4.Competing Electronic Displ
Page 39 and 40: wafer. For FLC-on-silicon microdisp
Page 41 and 42: FIGURE 5.Within-Market Increase in
Page 43 and 44: FIGURE 6.Estimated ATP Employment E
Page 45 and 46: subtracted the opportunity value of
Page 47 and 48: FIGURE 8.Historic Display Price-Qua
Page 49 and 50: TABLE 6.Estimated Consumer Surplus
Page 51 and 52: TABLE 7.Organizations and Groups Mo
Page 53 and 54: FIGURE 12.Patent Citations to Displ
Page 55 and 56: ColorLink’s pi-cell color switche
Page 57 and 58: FIGURE 14.Geographic Distribution o
Page 59 and 60: competitors, were added by patent e
Page 61 and 62: FIGURE 16.Citations to Displaytech
Page 63 and 64: TABLE 9.Top Organizations and Indiv
Page 65 and 66: FIGURE 19.Corporate Citations to Di
Page 67 and 68: TABLE 10.Corporations Citing Post-1
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Page 71 and 72: acklights of LCDs; and they are bri
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which was to give DuPont access to
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FIGURE 20.Timing of Displaytech and
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Table 11. Organizations and Groups
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FIGURE 23.Patent Citations to Uniax
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In summary, together with Uniax ear
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TABLE 12.OLS Regression Results on
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FIGURE 26.Corporate Citations to Un
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TABLE 13.ContinuedTop 25 Individual
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FIGURE 28.Corporate Citations to Un
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4. Findings and ObservationsFINDING
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microdisplays. We cannot fully dise
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TABLE 15.Publication and Citation R
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social ties, distance in the sense
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FIGURE 30.Flowchart of ATP Technolo
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government policies, which establis
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• ATP goals inherently involve se
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iv. Suppliers. Three or four on who
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Business Journal of Phoenix, The (2
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Paul, J. (2000), A Brief History of
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ABOUT THE AUTHORSTodd A. Watkins is
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Direct and Spillover Effects of ATP-Funded Photonics Technologies

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