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Inducement Prizes and Innovation

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Author Info
Brunt, Liam
Lerner, Josh
Nicholas, Tom

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Abstract

We examine prizes as an inducement for innovation using a novel dataset of awards for inventiveness offered by the Royal Agricultural Society of England from 1839 to 1939. At annual shows the RASE held competitive trials and awarded medals and monetary prizes (exceeding one million pounds in current prices) to spur technological development. We find large effects of the prizes on contest entries, especially for the Society’s gold medal. Matching award and patent data, we also detect large effects of the prizes on the quality of contemporaneous inventions. These results hold even during the period when prize categories were determined by a strict rotation scheme, thus overcoming the potential confounding effect that awards may have targeted "hot" technology sectors. Our evidence suggests that prize awards can be a powerful mechanism for encouraging competition and that prestigious non-pecuniary prizes can be a particularly effective inducement for innovation.

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Publisher Info
Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6917.

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Date of creation: Jul 2008
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Handle: RePEc:cpr:ceprdp:6917

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Related research
Keywords: awards; contests; patents;

Find related papers by JEL classification:
N40 - Economic History - - Government, War, Law, and Regulation - - - General, International, or Comparative
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives

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  1. Masters, William A. & Delbecq, Benoit, 2008. "Accelerating innovation with prize rewards: History and typology of technology prizes and a new contest design for innovation in African agriculture," IFPRI discussion papers 835, International Food Policy Research Institute (IFPRI). [Downloadable!]
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