Direct and Spillover Effects of ATP-Funded Photonics Technologies

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unable to discern knowledge spillover value, we were able to estimate market spillovers.Given the 10-year-plus delay between both Displaytech and Uniax’s ATP applications andvolume commercialization (notably in line with ATP’s stated target of funding precompetitiveresearch), display markets and technologies evolved considerably. Indeed,Displaytech’s main application in digital viewfinders was not among the main marketsidentified in their ATP proposal. Nor was microdisplays the primary competition a decadeago from U.S. firms like TI, Kopin, and Brillan. Or plasma displays. Or organic displays.Instead, it was the LCDs and CRT displays of several generations ago, markets whollydominated by foreign firms. Our interviewing experience in these cases convinces us that it is,in fact, easier for respondents to estimate value relative to current competitors—dynamicdefender technologies—rather than static defender options available a decade ago. The clarityof the conversations was aided considerably by the narrowness of the Uniax and Displaytechtechnology portfolios, essentially single-technology firms that industry insiders knew well.Confirming our hypothesis that use of static defender technologies would tend to lead tooverestimates of social value, competition and price elasticities have increased in displaymarkets while current price levels are fractions what they were a decade ago. We estimatethat our consumer surplus estimates using dynamic defenders are smaller by a rough order ofmagnitude than they might have been using static defenders.The analysis supports our view that the dynamic defender technology approach to spilloverevaluation is methodologically superior. Indeed, the Displaytech and Uniax cases suggestexpanding the methodological approach beyond the displaced defender technology, toinclude dynamic complementary technologies and dynamic application areas as well.GENERAL OBSERVATIONS ON TECHNOLOGY DEVELOPMENTAND EVALUATION METHODOLOGIESATP’s mission is to fund high-risk advanced technology developments with the potential forsignificant economic and social payback for the nation. The extensive and complex nature ofthis technology development process is pictured in the flowchart in Figure 30.In an ATP-funded technology, there may be a stage prior to the ATP proposal where initialtechnology development occurs, pre-ATP technology development. These developments mayoccur in a variety of ways: through university research funded by the NSF; through SBIRgrants from various federal agencies; through DOD contracts; through large corporationresearch subsequently spun off into an independent company; and through a robust arrayof other public and private mechanisms.ATP enters the picture when a technology appears to have significant commercial potential,at the proposed ATP technology development stage. ATP funds the development oftechnologies, not products, in this stage of technology development.If an ATP-funded technology is successfully developed, it, along with other necessarytechnology developments, likely gets embodied in a component or product that is only one82 DIRECT AND SPILLOVER EFFECTS OF ATP-FUNDED PHOTONICS TECHNOLOGIES
FIGURE 30.Flowchart of ATP Technology Development and Economic BenefitGeneration ProcessOthertechnologydevelopmentsOthercomponentsor subsystemsPre-ATPtechnologydevelopmentProposedATPtechnologydevelopmentEmbodied incomponentor productEmbedded incomplexproduct/systemPart of aprocess orsystemWhich has acommercialapplicationWhich resultsin economicand socialbenefitspiece of a system that actually results in a commercial application. In order for that higherorderproduct to work, however, other components or subsystems are also needed, some ofwhich may also require significant technology development. If all of the pieces becomeavailable, they can be integrated and the ATP technology will now be embedded in acomplex product or system that delivers the functionality required for the envisionedcommercial application. But often the complex product or system does not deliver thefunctionality by itself, but only as part of a yet-larger process or system in which othercomplementary products and services are integrally involved. It is this larger system thatgenerates the ultimate commercial value and economic and social benefits for the nation.So, it is important to recognize that, in addition to the technical risk inherent in thedevelopment of the ATP technology itself—for example, it may fail to perform costeffectively—thereare significant uncertainties, both risks and opportunities, downstream thatmay affect the perceived success of the outcome. These uncertainties are inherent in the factthat many of the downstream applications—not only substitute products and systems, butalso complementary products and systems—also tend to involve technologies in the earlydynamic stages of their own development life cycles. This dynamic complementarytechnology uncertainty is compounded by the risk of market failure that can also occur—forFindings and Observations 83
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NIST GCR 06-893Direct and Spillover
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AbstractTo evaluate the impact of t
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AcknowledgmentsThis research would
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This report presents the findings f
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6. This case study suggests that ke
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3. Comparison of Displaytech and Un
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1. Introduction and BackgroundThe A
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the Department of Defense (DOD), Na
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Hence, we consider two additional s
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area because many photonics technol
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FIGURE 2Worldwide Photonics Compone
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TABLE 3.Matched Case Study Firms by
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2. DisplaytechINTRODUCTIONIn June 1
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significant interest worldwide. The
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FIGURE 3Cross-Section of a Ferroele
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TABLE 4.Crowded Display Competition
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FIGURE 4.Competing Electronic Displ
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wafer. For FLC-on-silicon microdisp
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FIGURE 5.Within-Market Increase in
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FIGURE 6.Estimated ATP Employment E
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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
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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 73 and 74: which was to give DuPont access to
Page 75 and 76: FIGURE 20.Timing of Displaytech and
Page 77 and 78: Table 11. Organizations and Groups
Page 79 and 80: FIGURE 23.Patent Citations to Uniax
Page 81 and 82: In summary, together with Uniax ear
Page 83 and 84: TABLE 12.OLS Regression Results on
Page 85 and 86: FIGURE 26.Corporate Citations to Un
Page 87 and 88: TABLE 13.ContinuedTop 25 Individual
Page 89 and 90: FIGURE 28.Corporate Citations to Un
Page 91 and 92: 4. Findings and ObservationsFINDING
Page 93 and 94: microdisplays. We cannot fully dise
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Page 97: social ties, distance in the sense
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Page 108 and 109: Business Journal of Phoenix, The (2
Page 110 and 111: Paul, J. (2000), A Brief History of
Page 113: ABOUT THE AUTHORSTodd A. Watkins is
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Direct and Spillover Effects of ATP-Funded Photonics Technologies

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