Inventive Activity and the Market for Technology in the United States, 1840-1920

The growth of the U.S. economy over the nineteenth century was characterized by a sharp acceleration in the rate of inventive activity and a dramatic rise in the relative importance of highly specialized inventors as generators of new technological knowledge. Relying on evidence compiled from patent records, we argue that the evolution of a market for technology played a central role in these developments. Across both individuals and geographic areas, the expansion of opportunities to trade in patent rights was closely associated with increases in specialization at invention, as well as advances in rates of invention more generally. The patent system is often celebrated for the stimulus to invention provided by granting limited monopoly rights to inventors for the use of their discoveries, but its specification of tradable assets in technology has also been important.